Quantum-chemical calculations employing a density-functional theory/Hartree-Fock hybrid method (B3LYP) have been used to explore the mechanistic details of the C-C and C-H bond-activation processes in propane mediated by a bare Fe+ ion. While the theoretically predicted results are in complete accord with all available experimental data, they give rise to a different mechanistic picture than envisaged previously. In contrast to earlier speculations, the activation barriers for the initial insertion steps of Fe+ into a C-H or C-C bond are found to be significantly below the Fe+ + C3H8 channel. The rate-determining steps for both, the C-C and the C-H bond activation branches of the [FeC3H8](+) potential-energy surface rather occur late on the respective reaction coordinates and are connected with saddle points of concerted rearrangement processes. The C-C bond activation, which leads to the exothermic reductive elimination of methane, occurs via the C-C inserted species and not as a side channel originating from a C-H inserted ion, as assumed hitherto. For the C-H bond-activation processes, which finally results in the exothermic expulsion of molecular hydrogen, two energetically similar reaction channels for an [1,2]-elimination exist. The results clearly show, that an [1,3]-H-2-elimination mechanism cannot compete with the [1,2]-elimination paths, in line with the experimental findings. Overall, a lower energy demand for the reductive elimination of methane compared to the loss of H-2 is obtained, straightforwardly explaining the preference of the former process observed experimentally.