Density functional calculations (B3 LYP & BP86) on a model system for the reaction between carbon monoxide and [Ni(N(3))('S(3)')](-) ('S(3)'(2-)=bis(2-mercaptophenyl)sulfide (2-)) predict a three-step mechanism. First, CO attacks the nickel to generate a pseudo "square-pyramidal" complex, in which CO, N(3) (-), and two sulfides are basal and the central S atom of the 'S(3)'(2-) ligand backs away from Ni to form a weak Ni-S apical bond. Then, CO inserts into the Ni-N bond and the weak apical Ni--S bond rebounds to its original strength as the nickel forms a square-planar intermediate. Finally, in a one-step process N(2) leaves as the remaining N atom and carbonyl rearrange to produce the nickel isocyanate product [Ni(NCO)('S(3)')](-).