The mechanisms for the oxidation of phenyl and hydride ligands of bis(pentamethylcyclopentadienyl)hafnium derivatives (Cp* = η⁵-C₅Me₅) by nitrous oxide via selective oxygen atom transfer reactions have been systematically studied by means of density functional theory (DFT) calculations. On the basis of the calculations, we investigated the original mechanism proposed by Hillhouse and co-workers for the activation of N₂O. The calculations showed that the complex with an initial O-coordination of N₂O to the coordinatively unsaturated Hf center is not a local minimum. Then we proposed a new reaction mechanism to investigate how N₂O is activated and why N₂O selectively oxidize phenyl and hydride ligands of . Frontier molecular orbital theory analysis indicates that N₂O is activated by nucleophilic attack by the phenyl or hydride ligand. Present calculations provide new insights into the activation of N₂O involving the direct oxygen atom transfer from nitrous oxide to metal–ligand bonds instead of the generally observed oxygen abstraction reaction to generate metal–oxo species.