Density functional calculations were carried out to ascertain the origin of enantioselectivity in the brucine N-oxide (BNO)-assisted enantioselective Pauson-Khand reaction (PKR) of norbornene with 2-methyl-3-butyn-2-ol. The computed ee value in acetone is 68% (R), which compares well to the previously reported experimental value of 58% (R). In DME the computed ee value of 76% (R) is in excellent agreement with the experimentally determined value of 78% (R). The mechanism of enantioselectivity consists of several steps. First, the dicobalt complex is activated by BNO with chirality transfer from enantiopure BNO to the dicobalt complex. Second, competition occurs between a racemization process and complexation with the olefin reagent, which leads to the products. The lower ee value in acetone is due to the lower energy barrier of the racemization process. Calculations show that replacement of BNO by a hypothetical more enantioselective chiral N-oxide will hardly increase the ee value beyond 90%.