Hydroxylammmonium nitrate (hydroxylamine nitrate, HAN) is one of the most promising candidates as a replacement for commonly used liquid mono-propellants such as hydrazine. The reaction pathways involved in the initial and the catalytic decomposition of HAN in aqueous solution were determined using quantum chemistry calculations incorporating solvent effects. Optimized structures were obtained for the reactants, products and transition states at the ωB97XD/6-311++G(d,p)/SCRF = (solvent = water) level of theory and the total electron energies of these structures were calculated at the CBS-QB3 level of theory. In the initial decomposition, the ion-neutral NH3OH + -HNO3 reaction, the neutral-neutral NH3O-HNO3 reaction and the HNO3 self-decomposition pathways were all found to have reasonable energy barriers, with values of 91.7 kJ/mol, 88.7 kJ/mol and 89.8 kJ/mol, respectively. The overall reaction resulting from any of these pathways can be written as: HAN → HONO + HNO + H2O. The ionic reaction is dominant during the initial decomposition of HAN in aqueous solution because NH3OH+ and NO3 -are the major species in such solutions. We also developed six catalytic mechanisms and each of these schemes provided the same global reaction: NH2OH + HONO → N2O + 2H2O. The t-ONONO2 oxidizing scheme is the most plausible based on the energy barrier results.