The reaction of NCO with NO, an important elementary process involved in the reduction of NOx by HNCO, has been studied theoretically using the BAC-MP4 technique in conjunction with RRKM calculations. The computed molecular structures and thermochemical data for various intermediates and transition states suggest that the reaction takes place primarily via the singlet, ground electronic state OCNNO molecule according to the following mechanism: (step a) NCO + NO ⇔ 1OCNNO → N2O + CO; (step b) NCO + NO ⇔ 1OCNNO → c-OCNNO- → N2 + CO2. The formation of N2O + CO occurs by the fragmentation of the singlet OCNNO intermediate step (a), whereas the production of N2 + CO2 by cyclization-fragmentation occurs via step b. The tight transition states leading to the formation of these products, coupled with the loose entrance channel, give rise to the experimentally observed strong negative temperature dependence which can be quantitatively accounted for by the results of RRKM calculations based on the BAC-MP4 data. The experimentally measured product branching ratio for channels a and b could be accounted for theoretically by lowering the calculated energy barrier for step a by 3.6 kcal/mol, corresponding to about 15% of the barrier height.