The reaction mechanisms of intermolecular cleavage reaction of N-(2-hydroxyphenyl)-phthalamic acid were studied via the density functional theory(DFT). All geometries of the reactant, transition states, and products were optimized at the B3LYP/6-31G(d, p) level. Vibration analysis was carried out to confirm its identity as transitions’ structure, and the intrinsic reaction coordinate method(IRC) was used to search the minimum energy path. Two possible reaction channels are reported in this article. The calculated results indicate that O-cyclization reaction channel has the lower activation barrier, and therefore, it occurs more easier than the other. The reaction mechanisms of intermolecular cleavage reaction of N- (2-hydroxyphenyl) -phthalamic acid were studied via the density functional theory (DFT). All geometries of the reactant, transition states, and products were optimized at the B3LYP / 6-31G d, p) level. Vibration analysis was carried out to confirm its identity as transitions’ structure, and the intrinsic reaction coordinate method (IRC) was used to search the minimum energy path. Two possible reaction channels are reported in this article. results indicate that O-cyclization reaction channel has the lower activation barrier, and therefore, it occurs more easier than the other.