For the first time, a comprehensive and consistent picture of the catalytic cycle of 1,4-polymerization of butadiene with neutral dimeric allylnickel(II) halides [Ni(C3H5)X]2 (X = Cl- (I), Br- (II), and I- (III)) as single-site catalysts has been derived by means of quantum chemical calculations that employ a gradient-corrected density-functional method. All crucial reaction steps of the entire catalytic course have been scrutinized, taking into account butadiene pi complex formation, symmetrical and asymmetrical splitting of dimeric pi complexes, cis-butadiene insertion, and anti-syn isomerization. The present investigation examines, in terms of located structures, energies and activation barriers, the participation of postulated intermediates, in particular it aimed to clarify whether monomeric or dimeric species are the catalytically active species. Prior qualitative mechanistic assumptions are substituted by the presented theoretically well-founded and detailed analysis of both the thermodynamic and the kinetic aspects, that substantially improve the insight into the reaction course and enlarge them with novel mechanistic proposals. From a mechanistic point of view, all three catalysts exhibit common characteristics. First, chain propagation occurs by cis-butadiene insertion into the pi-butenylnickel(II) bond with nearly identical intrinsic free-energy activation barriers. Second, the reactivity of syn-butenyl forms is distinctly higher than that of anti forms. Third, the chain-propagation step is rate-determining in the entire polymerization process, and the pre-established anti-syn equilibrium can always be regarded as attained. Accordingly, neutral dimeric allylnickel(II) halides catalyze the formation of a stereo-regular trans-1,4-polymer under kinetic control following the k1t channel with butenyl(halide)(butadiene)NiII complexes being the catalytically active species. Production of a stereoregular cis-1,4-polymer with allylnickel chloride can only be explained by making the k2c channel accessible by the formation of polybutadienyl(butadiene) complexes, which is accompanied by the coordination of the next double bond in the growing chain to the NiII center.