The mechanism of the ruthenium-catalyzed dehydrogenation of methanol has been investigated by using three DFT-based methods. Three pathways were considered in which the ruthenium catalyst was ligated by either two or three phosphine ligands. Dispersion interactions, which are not described by the popular B3LYP functional, were taken into account by using the dispersion-corrected B3LYP-D and M06 density functionals. These interactions were found to be important in the description of reaction steps that involved ligand/substrate/product association with or dissociation from the catalyst. In line with experimental results, the resting state of the catalyst was predicted to be a ruthenium trihydride complex. It is shown that the dehydrogenation reaction preferentially proceeds through pathways in which the catalyst is ligated by two phosphine ligands. The catalytic cycle of the dehydrogenation process involves an intermolecular proton transfer from the methanol substrate to the catalyst followed by the release of dihydrogen. Rate-determining β-hydride elimination from the resulting methoxide species then regenerates the resting state of the catalyst and completes the catalytic cycle. The overall free-energy barriers of 29.6–31.4 kcal mol−1 predicted by the three density functionals are in good agreement with the experimentally observed reaction rate of 6 h−1 at 423 K.