The hydrogenation of internal alkynes with [Cp*Ru]-based catalysts is distinguished by an unorthodox stereochemical course in that E-alkenes are formed by trans-delivery of the two H atoms of H. A combined experimental and computational study now provides a comprehensive mechanistic picture: a metallacyclopropene (η-vinyl complex) is primarily formed, which either evolves into the E-alkene via a concerted process or reacts to give a half-sandwich ruthenium carbene; in this case, one of the C atoms of the starting alkyne is converted into a methylene group. This transformation represents a formal gem-hydrogenation of a π-bond, which has hardly any precedent. The barriers for trans-hydrogenation and gem-hydrogenation are similar: whereas DFT predicts a preference for trans-hydrogenation, CCSD(T) finds gem-hydrogenation slightly more facile. The carbene, once formed, will bind a second H molecule and evolve to the desired E-alkene, a positional alkene isomer or the corresponding alkane; this associative pathway explains why double bond isomerization and over-reduction compete with trans-hydrogenation. The computed scenario concurs with para-hydrogen-induced polarization transfer (PHIP) NMR data, which confirm direct trans-delivery of H, the formation of carbene intermediates by gem-hydrogenation, and their evolution into product and side products alike. Propargylic -OR (R = H, Me) groups exert a strong directing and stabilizing effect, such that several carbene intermediates could be isolated and characterized by X-ray diffraction. The gathered information spurred significant preparative advances: specifically, highly selective trans-hydrogenations of propargylic alcohols are reported, which are compatible with many other reducible functional groups. Moreover, the ability to generate metal carbenes by gem-hydrogenation paved the way for noncanonical hydrogenative cyclopropanations, ring expansions, and cycloadditions.