A study of the mechanism of toluene disproportionation catalyzed by the zeolite ZSM-5 has been conducted using toluene-alpha,alpha,alpha-d(3). The primary mechanism is a benzylic cation chain reaction. This conclusion is deduced from the fate of the deuterium label, observation of a kinetic induction period as well as a primary kinetic isotope effect, and rate acceleration upon addition of small amounts of diphenylmethane during reaction. The magnitude of the kinetic isotope effect, 1.88 at 250 degrees C, implies the existence of a nearly symmetrical, linear configuration of C-H-C in the transition state of the hydride transfer step between the toluene methyl and the benzylic cation. Such a model of the transition state fits well inside the straight channel of ZSM-5, based on steric considerations alone.