A detailed mechanistic investigation of sixteen possible diastereomeric pathways for the C-C bond formation step in (S)-proline catalyzed Mannich reaction of acetaldehyde with N-acetyl protected benzaldimine in acetonitrile solvent has been carried out to understand how stereoelectronic features invoke enantioselectivity of the final product. Both kinetic and thermodynamic factors of the reaction obtained using various density functional theory methods point out that si-enantiofacial nucleophilic attack of anti-enamine on the iminium carbon of the E, s-cis N-acetyl protected imine is the stereoselective pathway. Structural features of the transition states predicted that enamine in anti conformation attacks the imine through a Burgi-Dunitz trajectory to yield the stereocenter. Computations at B3LYP-PCM/6-311++G(3df,2p)//B3LYP-PCM/6-31G(d,p) level showed a strong linear correlation between Burgi-Dunitz angle and activation energy when anti-enamine is used as nucleophile to react with all the configurations of the imine. Further, energy decomposition analysis has been carried out at B3LYP/TZ2P+ level for all the transition states, which revealed that the most dominant factor that control the enantioselectivity of the (S)-proline catalyzed Mannich reaction is steric effect. Though the less favored transition states showed high amount of stabilizing orbital interaction, the destabilizing steric effects from both Pauli repulsion and preparation energy for the reactant molecules are very high and overshadowed the stabilizing effects. However, in the most favored transition state, a balanced outcome of electronic and steric effects was observed. Solvation effect was nearly same for all the transition states and electrostatic effects showed no correlation to the rank order of the energy of the transition states. © 2011 Wiley Periodicals, Inc. J Comput Chem, 2011.