Density functional calculations have been carried out on the thermochemical aspects of catalytic ethylene dimerization by the d(8) hydride (propanedialato(1-))Ni-H (I), where the propanedialate(1-) anion served as a model for the chelate acac ligand, acetylacetonate(1-). The hydride (I) was found to have a low-spin d(8) configuration with a square planar structure where one site is vacated cis to hydrogen. It was shown that ethylene inserts readily into the Ni-H bond of(I) with an exothermicity of 44.6 kcal/mol. The resulting ethyl complex (III) has a strong agostic interaction between nickel and a beta-hydrogen. It is suggested that the ethyl complex is the actual catalyst in the dimerization cycle. The agostic interaction in III is estimated to have a strength of 10 kcal/mol. The next insertion of ethylene into the Ni-ethyl bond of III leads to the butyl complex (IV). The insertion is exothermic by 25 kcal/mol. The reaction between (IV) and ethylene leads finally to the release of 1-butene and the regeneration of the ethyl complex (III). This step is nearly thermoneutral with a reaction heat of 0.1 kcal/mol. It is suggested that the elimination of 1-butene takes place via a transition state in which both ethylene and l-butene are pi-complexed to I. The internal barrier of activation for the final step is calculated to be 17 kcal/mol. The substitution of hydrogen by CH3 or CF3 groups on the propanedialate(1-) ligand were also considered. It was found that such substitutions only had a minor effect on the thermochemistry of the insertion processes in the dimerization cycle.