Molecular mechanism of catalytic Kinugasa reaction of a cyclic nitrone and acetylene, derived from d-glyceraldehyde acetonide, using acetonitrile as a ligand and solvent is studied with density functional theory methods. Possible pathways of Cu(L) catalyzed 1,3-diploar cycloaddition/rearrangement cascade reaction are investigated. For a cycloaddition process, two possible mechanisms have been characterized: the first one corresponds to a one-step cycloaddition with a high activation barrier. The second one corresponds to the mono- or di-copper catalyzed stepwise process that in terms of calculated energy barriers, di-copper path is the most favorable. The reaction proceeds by rearrangement with two competitive mechanisms, formation of bicyclic oxaziridinium intermediate or ketene intermediate. Our calculations show that formation of ketene intermediate is the lowest energy pathway for the rearrangement process.