The effect of a coordinating counteranion on the mechanism of Cu(I)-catalyzed cyclopropanation has been investigated extensively for a medium-sized reaction model by means of theoretical calculations at the B3LYP/6-31G(d) level. The main mechanistic features are similar to those found for the cationic (without a counteranion) mechanism, the rate-limiting step being nitrogen extrusion from a catalyst-diazoester complex to generate a copper-carbene intermediate. The cyclopropanation step takes place through a direct carbene insertion of the metal-carbene species to yield a catalyst-product complex, which can finally regenerate the starting complex. However, the presence of the counteranion has a noticeable influence on the calculated geometries of all the intermediates and transition structures. Furthermore, the existence of a preequilibrium with a dimeric form of the catalyst, together with a higher activation barrier in the insertion step, explains the lower yield of cyclopropane products observed experimentally in the presence of chloride counterion. The stereochemical predictions of a more realistic model (made by considering a chiral bis(oxazoline)-copper(i) catalyst) have been rationalized in terms of the lack of significant steric repulsions, and the model shows good agreement with the low enantioselectivities observed experimentally for these kinds of catalytic systems.