The detailed mechanism of the double hydrophosphination of terminal arylacetylenes catalyzed by an iron complex was studied by density functional theory. The calculated results suggest that the reaction proceeds in three steps: active species generation, single hydrophosphination reaction (Cycle 1), double hydrophosphination reaction, viz., active species regeneration (Cycle 2). The results uncovered the selectivity of the iron complex for double hydrophosphination of terminal arylacetylenes. The symmetry of frontier molecular orbitals determines the effectiveness of the catalyst. We also discuss the formation mechanism of the single hydrophosphination product with Z configuration.