Possible mechanisms and origins of stereoselectivity of N‐heterocyclic carbene (NHC) promoted spirobenzazepinone formation from the annulation of an isatin‐derived enal and N‐(ortho‐chloromethyl)aryl amide have been investigated computationally. DFT results (M06–2X) suggest that the preferred mechanism consists of six steps: The nucleophilic coupling of the NHC catalyst and isatin‐derived enal was considered as the first reaction step (step I), followed by generation of the Breslow intermediate through a HCO3– assisted proton transfer event (step II). The next step is the addition of Breslow intermediate to N‐(ortho‐chloromethyl)aryl amide generating the acyl azolium intermediate (step III). Then the reaction proceeds through successive intramolecular cycloaddition (step IV), H2O‐mediated 1,3‐proton transfer (step V) and catalyst elimination (step VI) affording the [3+4] cycloaddition product. Step V plays a pivotal role in determining the stereoselectivity of the reaction and leads to the experimentally observed S‐configuration product. The DFT results account for the experimental observations. Global reactivity index analysis has also been conducted to identify the role of NHC catalyst.