DFT calculations at the B3LYP/6-31G** level were conducted on the reaction of the propane molecule with the aluminum hydroxide clusters (HO)(3)Al(OH2)(x) (x = 0, 1). Weak, physisorbed (van der Waals) complexes were identified. Chemisorption does not involve the Bronsted acidity of the catalyst, as no hydron transfer occurs. Instead, the reaction involves insertion of the aluminum atom into a C-H bond, followed by the migration of the hydrogen atom from aluminum to oxygen, to form the chemisorbed intermediate, (H2O)(x+1)(HO)(2)Al-CH2Et or (H2O)(x+1)(HO)(2)Al-CHMe2, with the latter having a higher energy barrier. The elimination of hydrogen from C and oxygen gives then H-2 and propene, which forms a strong pi complex with the aluminum cluster for x = 0. The first step, chemisorption, has a lower energy barrier than the second, elimination, but still higher than the hydrogen dissociation on the same clusters. Thus, the rate relationship H-2/D-2 exchange > H-2/RH exchange > RH dehydrogenation is predicted, as was experimentally observed. The tetracoordinated aluminum cluster (x = 1) reacts with the hydrocarbon by the same pathway as the tricoordinated aluminum cluster (x = 0) but with higher barriers for both steps; the barriers are reduced for the larger cluster (HO)(2)(H2O)Al-O-Al(OH)(2)(H2O). The alternative pathway, forming the alkyl.-oxygen adduct (HO)(2)Al(OH2)(x)(H)-O(R)H is too high in energy to compete. Examination of butane and isobutane establishes the reactivity order: prim C-H > sec-C-H > tert-C-H. For isobutane, essentially only methyl C-H cleavage should occur in the common first step for hydrogen exchange and dehydrogenation. In the second step, i.e., the beta C-H cleavage in the Al-alkyl intermediate, the reactivity order is tert-C-H > secC-H > prim C-H. "Broken lattice" zeolites and especially extraframework aluminum species present in steamed zeolites should be more reactive than the intact zeolite lattices. Thus, the mechanism is relevant for the activation of alkanes for acid-catalyzed conversions on these catalysts, which have insufficient acid strength to cleave C-H and C-C bonds by hydron transfer.