Density functional theory (DFT) computations disclose the mechanism of a crucial neighboring participation step in BF3 catalyzed stereoselective glycosylation of 1,2-cyclopropaneacetylated galactosyl donor. Two tandem SN2 displacements comprise this step: first, the glycosyl acceptor attacks the BF3-activated donor to break the donor's 1,2-cyclopropane ring; then, the donor's 2-acetyl oxygen substitutes the acceptor to accomplish the neighboring participation. A donor–acceptor hydrogen bond has been found to lower the overall activation free energy. This mechanism is preferred over a 2-acetyl oxygen coface SN2 displacement mechanism, in which no glycosyl acceptor is involved. © 2013 Wiley Periodicals, Inc.