First-principles calculations have been performed to investigate CH(4) dissociation and C diffusion during the Ni∕Fe-catalyzed growth of carbon nanofibers (CNFs). Two bulk models with different Ni to Fe molar ratios (1:1 and 2:1) are constructed, and x-ray diffraction (XRD) simulations are conducted to evaluate their reliability. With the comparison between the calculated and experimental XRD patterns, these models are found to be well suited to reproduce the crystalline structures of Ni∕Fe bulk alloys. The calculations indicate the binding of the C(1) derivatives to the Ni∕Fe closest-packed surfaces is strengthened compared to that on Ni(111), arising from the upshift of the weighted d-band centers of catalyst surfaces. Then, the transition states for the four successive dehydrogenation steps in CH(4) dissociation are located using the dimer method. It is found that the energy barriers for the first three steps are rather close on the alloyed Ni∕Fe and Ni surfaces, while the activation energy for CH dissociation is substantially lowered with the introduction of Fe. The dissolution of the generated C from the surface into the bulk of the Ni∕Fe alloys is thermodynamically favorable, and the diffusion of C through catalyst particles is hindered by the Fe component. With the combination of density functional theory calculations and kinetic analysis, the C concentration in catalyst particles is predicted to increase with the Fe content. Meanwhile, other experimental conditions, such as the composition of carbon-containing gases, feedstock partial pressure, and reaction temperature, are also found to play a key role in determining the C concentration in bulk metal, and hence the microstructures of generated CNFs.