High level ab initio (G2MS and CASSCF) and density functional (B3LYP) calculations were carried out to study the mechanism of the ion-molecule reaction C2H2++CH3OH for four reaction channels: hydride abstraction from methanol (HA), proton transfer from acetylene cation (PT), charge transfer (CT), and covalent complex formation (CC) channel. For the CT channel, two pathways have been found: a usual nonadiabatic pathway via A'/A " seam of crossing, and a low-energy adiabatic pathway through an initial intermediate; the latter may be the dominant process with favorable energies and a large impact parameter. The HA process involves a low-energy direct intermediate and a very low barrier to form C2H3+CH2OH+ and is also energetically favorable. The PT processes require passage over a high-energy transition state (TS) and are not important. One of the experimentally unobserved CC channels, formation of the COCC skeleton, is energetically favorable and there is no energetic reason for it not to take place; a "dynamic bottleneck" argument may have to be invoked to explain the experiment. The increase in reaction efficiency with the C-C stretch excitation may be justified by considering the TSs for two CT pathways, where the C-C distance changed substantially from that in the reactant C2H2+. Very qualitatively, the C2H2++CH3OH potential energy surface looks more like that of the C2H2++NH3 system than the C2H2++CH4 system, because of the differences in the ionization potentials: NH(3)similar to CH3OH < C2H2< CH4.