Alkane proton exchange reaction and pentacoordinated carbonium ion transition state formation confined inside nanopores of H-ZSM-5 zeolites have been investigated by DFT theoretical calculations. By including both steric and long-range electrostatic effects associated with the zeolite framework structure, the transition state structures and activation barriers associated with the hydrogen exchange reaction may be predicted accurately. Unlike the reaction mechanisms found in typical homogeneous catalytic systems such as liquid superacids, it is found that the synergetic effect from electrostatic interactions and steric constraints dictates the regioselectivity of propane and isobutene carbonium ion transition state formation in the heterogeneous systems, such as microporous zeolites. (C) 2010 Elsevier B.V. All rights reserved.