A proposed mechanism of the reaction of guanidinium chlorides with dimethyl acetylenedicarboxylate in a tandem aza-Michael addition reaction/intramolecular cyclization was investigated by DFT M06-2X and B3LYP computational approaches. The energies of the products were compared against the G3, M08-HX, M11, and wB97xD data or experimentally obtained product ratios. The structural diversity of the products was interpreted by the concurrent formation of different tautomers formed in situ upon deprotonation with a 2-chlorofumarate anion. A comparison of relative energies of the characteristic stationary points along the examined reaction paths indicated that the initial nucleophilic addition is energetically the most demanding process. The overall reaction is strongly exergonic, as predicted by both methods, which is primarily due to methanol elimination during the intramolecular cyclization step producing cyclic amide structures. Formation of a five-membered ring upon intramolecular cyclization is highly favored for the acyclic guanidine, while optimal product structure for the cyclic guanidines is based on a 1,5,7-triaza [4.3.0]-bicyclononane skeleton. Relative stabilities of the possible products calculated by the employed DFT methods were compared against the experimental product ratio. The best agreement was obtained for the M08-HX approach while the B3LYP approach provided somewhat better results than the M06-2X and M11 methods.