Density functional theory (DFT) calculations have been used to investigate a possible reaction coordinate for the epoxidation of ethylene on silver. These studies have been motivated by recent advances in the understanding of the mechanisms of olefin epoxidation. We find various surface intermediates and transition states along the reaction coordinate with structures, binding energies, and vibrational frequencies that are in good agreement with experimental results. We also discuss the uniqueness of silver in providing an optimal environment for highly selective ethylene epoxidation. It was concluded that ethylene reacts with adsorbed oxygen to form a surface intermediate, identified as a surface oxametallacycle. This intermediate reacts through a transition state to form gas-phase ethylene oxide. The kinetic and thermodynamic parameters obtained in these studies are used to formulate a simple microkinetic model. The microkinetic model is used to estimate parameters needed for the formulation of a rate law. The resulting rate law agrees very well with observations from macroscopic measurements of ethylene epoxidation rates under steady-state conditions.