Ethanol, through the utilization of bioethanol as a chemical resource, has received considerable industrial attention as it provides an alternative route to produce more valuable hydrocarbons. Using a density functional theory approach incorporating the M06-L functional, which includes dispersion interactions, a large 34T nanocluster model of Fe-ZSM-5 zeolite in which T is a Si or Al atom is employed to examine both the stepwise and concerted mechanisms of the transformation of ethanol into ethene. For the stepwise mechanism, ethanol dehydration commences from the first hydrogen abstraction of the ethanol OH group to form the ethoxide-hydroxide intermediate with a low activation energy of 17.7 kcal mol−1. Consequently, the ethoxide-hydroxide intermediate is decomposed into ethene through hydrogen abstraction from the ethoxide methyl carbon to either the OH group of hydroxide or the oxygen of the ethoxide group with high activation energies of 64.8 and 63.5 kcal mol−1, respectively. For the concerted mechanism, ethanol transformation into the ethene product occurs in a single step without intermediate formation, with an activation energy of 32.9 kcal mol−1.