Theoretical simulations on complex electrochemical processes have been developed on the basis of the understanding in electrochemistry, which has benefited from quantum mechanics calculations. This article reviews the recent progress on the theory and applications in electrocatalysis. Two representative reactions, namely water electrolysis and oxygen reduction, are selected to illustrate how the theoretical methods are applied to electrocatalytic reactions. The microscopic nature of these electrochemical reactions under the applied potentials is described and the understanding of the reactions is summarized. The thermodynamics and kinetics of the electrochemical reactions affected by the interplay of the electrochemical potential, the bonding strength and the local surface structure are addressed at the atomic level. density functional theory, electrode/solution interface, water electrolysis, oxygen reduction reaction, review