A mechanistic study was performed on the Rh-catalyzed stereoselective C-C/C-H activation of tert-cyclobutanols. The present study corroborated the previous proposal that the reaction occurs by metalation, β-C elimination, 1,4-Rh transfer, C=O insertion, and a final catalyst-regeneration step. The rate-determining step was found to be the 1,4-Rh transfer step, whereas the stereoselectivity-determining step did not correspond to any of the aforementioned steps. It was found that both the thermodynamic stability of the product of the β-C elimination and the kinetic feasibility of the 1,4-Rh transfer and C=O insertion steps made important contributions. In other words, three steps (i.e., β-C elimination, 1,4-Rh transfer, and C=O insertion) were found to be important in determining the configurations of the two quaternary stereocenters.