The chloride free ion-exchanged Cu(II)Y is inactive for oxidative carbonylation of methanol to dimethyl carbonate. However, the Cu(I)Y as prepared from a solid-state ion-exchange method is very active. Ammonia can facilitate the copper migration into zeolite cages at low temperature (150 degrees C). The reaction mechanism was studied by in-situ FTIR. The formation of copper methoxide in the zeolite cages during the oxidation of methanol is the first step. The insertion of carbon monoxide into copper methoxide is the rate-limiting step. Methanol is required for the desorption of dimethyl carbonate (DMC) in zeolite cages.