It is shown that van der Waals interaction potential plays a crucial role in chemical reactions at low temperatures. By taking the Cl+HD reaction as an illustrative example, we demonstrate that quasibound states of the van der Waals potential preferentially undergo chemical reaction rather than vibrational predissociation. Prereaction occurs even when the wave functions of the quasibound states peak far out into the entrance channel, outside the region of the van der Waals well. It is found that chemical reaction dominates over nonreactive vibrational quenching in collisions of vibrationally excited HD molecules with ground state chlorine atoms at ultracold temperatures. (C) 2004 American Institute of Physics.