A detailed investigation of the reaction mechanisms underlying the observed reactivity of the iron dimer cation with respect to methane has been performed by density functional hybrid (B3LYP) and nonhybrid (BPW91) calculations. Minima and transition states have been fully optimized and characterized along the potential energy surfaces leading to three different exit channels for both the ground and the first excited states of the dimer. A comparison with our previous work covering the reactivity of the Fe+ monomer was made to underline similarities and differences of the reaction mechanisms. Results show that geometric arrangements corresponding to bridged positions of the ligands with respect to iron atoms are always favored and stabilize intermediates, transition states and products, facilitating their formation. Binding energies of reaction products have been computed and compared with experimental measurements, and ELF analysis of the bond has been performed to rationalize trends as a function of the structure.