The reaction mechanism for the hydrogenation of norbornadiene (nbd) catalyzed by bis-norbornadiene rhodium(I) [Rh(nbd)2]+ complex has been studied by means of DFT based methods, in the absence and in the presence of a self-folding octaamide cavitand. Formation of three products, norbornene, nortricyclene and a dimer is discussed. When the metal complex is encapsulated inside the cavitand, the steric crowding prevents formation of the dimer, while in the absence of the cavity, the dimer is the major product. Although energy differences between the studied reaction pathways are small, the present study explains the changes in regioselectivity when the hydrogenation reaction is carried out in a confined space.