The reaction between 1,5,6-trimethylpyrazinium-3-olate and methyl methacrylate (MMA) yielding a lactone-lactam has been studied using the DFT method at the B3LYP/6-31G(d) level. It is concluded that formation of the lactone-lactam is a domino process involving three consecutive reactions: (i) a 1,3-dipolar cycloaddition (13DC) reaction between the pyrazinium-3-olate and MMA yielding a [3 + 2] cycloadduct (CA); (ii) a skeletal rearrangement, which converts the [3 + 2] CA into a formal [4 + 2] CA, possessing a diazabicyclo[2.2.2]octane structure; and finally, (iii) an S(N)2 reaction, promoted by halide anion, with concomitant nucleophilic attack of the created carboxylate anion on an iminium carbon with formation of the lactone ring present in the lactone-lactam. Analysis of the four competitive channels associated with the 13DC reaction indicates that this cycloaddition takes place with complete endo stereoselectivity and 6 regioselectivity, yielding [3 + 2] CA. The subsequent skeletal rearrangement also takes place in an elementary step via a non-concerted mechanism. Electron localization function bonding analysis makes it possible to establish that the bicyclo[2.2.2]octane skeleton present in the lactone-lactam complex structure is not attained via a Diels-Alder reaction between pyrazinium-3-olate and MMA.