Density functional theory with gradient corrections and spin polarization has been used to study the dehydrogenation of CH3 on Ni(111), a crucial step in many important catalytic reactions. The reaction, CH3(ads)--> CH2(ads)+H-(ads), is about 0.5 eV endothermic with an activation energy of more than 1 eV. The overall reaction pathway is rather intriguing. The C moiety translates from a hcp to a fcc site during the course of the reaction. The transition state of the reaction has been identified. The CH3 species is highly distorted, and both C and the active H are centered nearly on top of a row of Ni atoms with a long C-H bond length of 1.80 Angstrom. The local density of states coupled with examination of the real space distribution of individual quantum states has been used to analyze the reaction pathway.