Catalytic transfer hydrogenation (CTH) of α,β-unsaturated aldehydes using single metal atom catalysts supported on nitrogen-incorporated graphene sheet (M–N x -Gr) materials has attracted increasing attention recently, yet the reaction mechanism remains to be explored. Compared to the Ni–N4-Gr model in which the dissociation of isopropanol is highly unfavorable as a result of steric hindrance and inertness of the Ni–N4 site embedded in graphene, the Ni–N3 site in Ni–N3-Gr is more active and facilitates the formation of *H with isopropanol as the H donor, where the dissociation of H from isopropanol with an energy barrier of 0.83 eV is the rate-determining step. An alternative reaction path starts from the coadsorption of isopropanol and furfural molecules at the Ni–N3 site, followed by a direct hydrogen transfer between the two molecules; however, the rate-determining step has a much higher energy barrier of 1.32 eV. Our calculations suggest that the hydrogenation of the aldehyde group is kinetically more favorable than the CC hydrogenation, revealing the high chemoselectivity of furfural to furfuryl alcohol. Our investigations reveal that the CTH mechanism using the Ni–N3-Gr catalyst is different from that on traditional metal oxides, where the former has only one single active site, while two active sites are required for the latter. The proposed reaction mechanism of CTH for furfural in this study should be helpful to guide the design of single metal atom catalysts with appropriate N coordination for application in chemoselective hydrogenation reactions.