Since the 1980s, nickel/palladium-based catalysts have been extensively studied for the coupling reactions of CO2 and ethylene. In this study, the CO2 and ethylene coupling mediated by the iron(0)-based catalyst with a bis(dicyclohexylphosphino)ethane (dcpe) ligand was systematically investigated by means of DFT calculations. The DFT functionals were first subjected to a benchmark test in order to describe an iron-catalyzed reaction with a two-state reactivity (TSR). For the Fe/dcpe catalytic system, the formation of the five-membered iron-lactone 3 follows a stepwise route, which is easy to occur with a low energy barrier of 13.8 kcal/mol. The competing reactions by CO2 insertion and β-H elimination determine the fate of the five-membered iron-lactone 3, which may lead to the formation of three different products, including the formation of i) succinic acid, ii) iso-methylmalonic acid, and iii) acrylic acid. The calculated TOFs showed that CO2 insertion into the five-membered iron-lactone 3 is more likely to occur (1.67 h−1 for the formation of succinic acid) compared with the β-H elimination leading to iso-methylmalonic acid and acrylic acid. Interestingly, β-H elimination can be effectively facilitated by addition of the electrophiles, and a comparable TOF of 0.042 h−1 was obtained for the formation of methyl acrylate in the presence of CH3I. Unlike nickel-/palladium-catalyzed CO2 and ethylene coupling reactions, all four iron(0)-catalyzed reaction routes investigated herein showed a two-state reactivity scenario involving spin crossover between triplet and quintet PESs. This study provides a mechanistic understanding of the intriguing iron(0)-catalyzed CO2 and ethylene coupling reactions, which may shed some light on the development of green catalysts for CO2 utilization.