Reaction mechanisms of alkaline hydrolysis of N-(2-methoxyphenyl) benzamide have been investigated using density functional theory (DFT). The whole reaction could be regarded as a successive process that consisted of two main stages: generation of the tetrahedral intermediate (M1) and the transformation from M1 to the final products. Three reaction channels were proposed for the second stage. Channel 1 is an intramolecular proton migration process. In channel 2 and channel 3, which could be regarded as an intermolecular proton migration process, the water molecule participates in the reaction and becomes a medium of proton transferring. We found that the rate-determining activation energy required for channel 2 and 3 is lower than channel 1, which indicates that the water not only acts as the solvent, but also plays an important role in the reaction. And this reaction could occur easily at room temperature, which is in good agreement with the experiments.