The chemical fixation of nitric oxide (NO) reacting with alkynyllithium to produce 5-methyl-3-oxide-1,2,3-oxadiazole has been investigated by using ab initio (U)MP2 and DFT/(U)B3LYP methods. The solvent effect was assessed using the combination of microsolvation model with explicit THF ligands on lithium and continuum solvent model based on the SCRF/CPCM method at the (U)B3LYP/6-31G* level. Our results reveal that the overall reaction is stepwise and considered to include two processes. In process 1, the nitrogen atom in nitric oxide at first attacks the C(1) atom in alkynyllithium to afford the intermediate 5. In process 2, after another nitric oxide reacted with the intermediate 5 to produce 8a, we found that two pathways are involved. For path 1, the O(2) atom at first attacks the C(2) atom to form a five-membered ring geometry, and then lithium can rotate around the N(1)-O(1) bond, leading to the product 5-methyl-3-oxide-1,2,3-oxadiazole followed addition of water. However, for path 2, lithium atom rotates first around the N(1)-O(1) bond, and then the product 5-methyl-3-oxide-1,2,3-oxadiazole is also generated by addition of water. Our calculations indicate that path 1 is more favorable than path 2 in the gas phase, while both of them exist possibly in THF solvent. The overall reaction is exothermic.