The mechanism of carbonylation of alkyl halides using [Fe(CO)3(NO)]− has been studied using density functional theory (DFT). Our results suggest an SN2 mechanism for the alkylation event followed by a well-defined oxidative addition and alkyl migration. An experimentally elusive common intermediate [Fe(CO)2NO(Ac)] has been identified in two isomers and reacted in silico with a number of ligands (CO, PH3 and PPh3) to give the corresponding iron acyl complexes. Pathways between the two isomers, including direct involvement of a solvent molecule (THF) or iodide, have been elucidated.