The mechanism of stereoselective addition of Grignard reagents to carbonyl compounds has been investigated using B3LYP density functional theory calculations. The study of the reaction of methylmagnesium chloride and formaldehyde in dimethyl ether revealed a new reaction path involving carbonyl compound coordination to magnesium atoms in a dimeric Grignard reagent. The structure of the transition state for the addition step shows that an interaction between a vicinal-magnesium bonding alkyl group and C=O causes the C-C bond formation. The simplified mechanism shown by this model is in accord with the aggregation nature of Grignard reagents and their high reactivities toward carbonyl compounds. Concerted and four-centered formation of strong O-Mg and C-C bonds was suggested as a polar mechanism. When the alkyl group is bulky, C-C bond formation is blocked and the Mg-O bond formation takes precedence. A diradical is formed with the odd spins localized on the alkyl group and carbonyl moiety. Diradical formation and its recombination were suggested to be a single electron transfer (SET) process. The criteria for the concerted polar and stepwise SET processes were discussed in terms of precursor geometries and relative energies.