Abstract: The mechanism of the thermolysis of oxetane to form ethylene and formaldehyde has been studied in detail by semiempirical molecular orbital theory. The calculations have been carried out using a new general purpose quantum mechanical molecular model AM_1 presented by M. J. S. Dewar et al in 1985,and performed with GAUSSIAN 86 program. The various critical points in the region of the reaction have been fully optimized with Berny gradients and transition structures (TS) have been confirmed by frequency analysis. By calculations, we concluded that: 1) concerted supra-supra reaction path doesn't exist and the critical point involved is a second-order asddle point with two negative eigenvalues; 2) concerted supra-antara approach is found to proceed via a very high energy transition state; 3) the favoured reaction pathway is found to proceed via a stepwise approach characterized by diradical intermediates. The stepwise approach has two different pathways, one of them is to cleava carbon-car-bon bond firstly and then carbon-oxygen bond, it involves gauche intermediate and corresponding transition states. Another stepwise pathway is to break carbon-oxygen bond at first and then carbon-carbon bond, it proceeds vis a gauche or a trans intermediate and corresponding transition states. The two stepwise pathways coexist and compete each other.