First-principles density functional theory calculations are first used to study possible reaction mechanisms of molybdenum carbide (Mo2C) as cathode catalysts in Li-CO2 batteries. By systematically investigating the Gibbs free energy changes of different intermediates during lithium oxalate (Li2C2O4) and lithium carbonate (Li2CO3) nucleations, it is theoretically demonstrated that Li2C2O4 could be stabilized as the final discharge product, preventing the further formation of Li2CO3. The surface charge distributions of Li2C2O4 adsorbing onto catalytic surfaces are studied by using Bader charge analysis, given that electron transfers are found between Li2C2O4 and Mo2C surfaces. The catalytic activities of catalysts are intensively evaluated toward the discharge and charge processes by calculating the electrochemical free energy diagrams to identify the overpotentials. Our studies promote the understanding of electrochemical processes and shed more light on the design and optimization of cathode catalysts for Li-CO2 batteries.