An investigation into the mechanism and stereochemistry of chiral lithium-carbenoid-promoted cyclopropanation reactions by using density functional theory (DFT) methods is reported. Previous work suggested that this type of cyclopropanation reaction may proceed by competition between a methylene-transfer mechanism and a carbometalation mechanism. In this paper, it is demonstrated that the intramolecular cyclopropanation reactions promoted by chiral carbenoids 1 and 2 proceed by the methylene-transfer mechanism. The carbometalation mechanism was found to have a much higher reaction barrier and does not appear to compete with the methylene-transfer mechanism. The Lewis base group does not enhance the carbometalation pathway enough to compete with the methylene-transfer pathway. The present computational results are consistent with experimental observations for these cyclopropanation reactions. The factors governing the stereochemistry of the intramolecular cyclopropanation reaction by the methylene-transfer mechanism were examined to help elucidate the origin of the stereoselectivity observed in experiments. Both the directing group and the configuration at the C(1) centre were found to play a key role in the stereochemistry. Carbenoid 1 has a chiral C(1) centre of R configuration. The Lewis base group directs the cyclization of carbenoid 1 to form a single product. In contrast, the Lewis base group cannot direct the cyclization of carbenoid 2 to furnish a stereoselective product due to the S configuration of the chiral C(1) centre in carbenoid 2. This relationship of the stereochemistry to the chiral character of the carbenoid has implications for the design of new efficient carbenoid reagents for stereoselective cyclopropanation.