The mechanism of the reaction between di-tert-butyl azadicarboxylate and 1,3-dicarbonyl compounds catalyzed by an axially chiral guanidine is investigated by density functional theory methods. The results show that the catalyst acts simultaneously as a Brønsted base and an acid catalyst, and the mechanism is similar to that of the related BINOP organocatalysts. Surprisingly, cyclic and acyclic β-keto esters yield opposite enantiomers; the calculations demonstrate that this is a consequence of the preferred enolate geometry in the transition structures. Literature evidence suggests that other organocatalytic reactions show similar behavior.