As a model of olefin polymerization by a homogeneous Ziegler-Natta catalyst, the mechanism of the insertion reaction of ethylene and propylene into CH3TiCl2+ has been studied by the ab initio MO method. The structures of the reactant, the intermediate, the transition state, and the product have been optimized with the RHF/3-21G (Ti:MID14) method. The transition state is four-centered and is slightly nonplanar to avoid C-H bond eclipsing. In the product strong C(beta)-C(gamma) and C-H agostic interactions take place to donate electrons to Ti vacant d orbitals. The energetics calculated at the unrestricted second-order Moller-Plesset perturbation level with double spin projection (DPUMP2) shows that the reaction proceeds via an ethylene complex with a binding energy of 45 kcal/mol and through the transition state with an activation energy from the ethylene complex of about 4 kcal/mol. In propylene polymerization, the barrier is higher than in ethylene insertion, and the primary insertion is easier than the secondary insertion, both consistent with experiments. The energy decomposition analysis indicates that these chemo- and regioselectivities are controlled by electrostatic and exchange (steric) interactions. The nonplanarity of the transition state makes one of two stereospecific primary insertion pathways substantially more favorable than the other; this tendency of a nonplanar transition state may have significance in determining stereospecificity in olefin polymerizations.