The potential energy surface (PES) corresponding to the Co(+)-mediated oxidation of ethane by N(2)O has been investigated by using density functional theory (DFT). After initial N(2)O reduction by Co(+) to CoO(+), ethane oxidation by the nascent oxide involves C-H activation followed by two possible pathways, i.e., C-O coupling accounting for ethanol, Co(+)-mediated β-H shift giving the energetically favorable product of CoC(2)H(4)(+) + H(2)O, with minor CoOH(2)(+) + C(2)H(4). CoC(2)H(4)(+) could react with another N(2)O to yield (C(2)H(4))Co(+)O, which could subsequently undergo a cyclization mechanism accounting for acetaldehyde and oxirane and/or a direct H-abstraction mechansim for ethenol. Loss of oxirane and ethenol is hampered by respective endothermicity and high kinetics barrier, whereas acetaldehyde elimination is much energetically favorable. CoOH(2)(+) could facilely react with N(2)O to form OCoOH(2)(+), rather than Co(OH)(2)(+) or CoO(+).