AKD (alkyl ketene dimers) is an excellent Neutral Sizing Agent. China is a significant player in the world pulp and paper community, with paper and paper board output totaling 50 million NIT in 2005 and estimated capacity of 70 million MT by 2010. In an effort to improve the paper quality, the application of neutral sizing agents will be promoted, therefore one may expect that AKD will be in great demand. AKD can be prepared by reactions of acid halides with tertiary amines in inert organic solvents and the main reaction is the dimerization of alkyl ketene. In this paper, the Quantum chemical method was employed to investigate the mechanism of dimerization reactions of ketene. All the geometric configuration of the stationary points on the reactions path were optimized with Gaussian03 in density functional theory at B3LYP/6-311G++(d, p) level by the energy gradient technique. The transition states were also investigated based on the synchronous transit method, and its suitability was confirmed by using the frequency analysis and intrinsic reaction coordinate analysis. The results can be summarized as follows: the dimerization reaction (3) to generate four-membered carbon cyclic product P3 is not possible. Two different dimerization processes of alkyl ketene are all concerted but non-synchronous, taking place via the twisted four-membered cyclic transition states. The respective activation energies of 34.54 and 61.73 kJ/mol were calculated for the two ketene dimerization processes. The theoretical results are in good agreement with the experimental observation.