An increasing number of experimental studies have demonstrated that metal or metal oxide nanoparticles confined inside carbon nanotubes (CNTs) exhibit different catalytic activities with respect to the same metals deposited on the CNT exterior walls, with some reactions enhanced and others hindered. In this article, we describe the concept of confinement energy, which enables prediction of confinement effects on catalytic activities in different reactions. Combining density functional theory calculations and experiments by taking typical transition metals such as Fe, FeCo, RhMn, and Ru as models, we observed stronger strains and deformations within the CNT channels due to different electronic structures and spatial confinement. This leads to downshifted d-band states, and consequently the adsorption of molecules such as CO, N-2, and O-2 is weakened. Thus, the confined space of CNTs provides essentially a unique microenvironment due to the electronic effects, which shifts the volcano curve of the catalytic activities toward the metals with higher binding energies. The extent of the shift depends on the specific metals and the CNT diameters. This concept generalizes the diverse effects observed in experiments for different reactions, and it is anticipated to be applicable to an even broader range of reactions other than redox of metal species, CO hydrogenation, ammonia synthesis and decomposition discussed here.