(PCP)Ir(H)2 (PCP = eta3-1,3-C6H3(CH2PR2)2) complexes are highly effective catalysts for the dehydrogenation of alkanes; in particular, they are the first efficient molecular catalysts for alkane dehydrogenation that do not require a sacrificial hydrogen acceptor. Using density functional theory/effective core potential methods, we have examined C-H bond cleavage in alkanes and arenes by both (PCP)Ir and (PCP)Ir(H)2. C-H addition to the dihydride is accompanied by loss of H2; both associative and dissociative pathways for this exchange reaction have been examined. The energetic barrier (deltaE(is not equal)) for associative displacement of H2 by benzene is much lower than the barrier for a dissociative pathway involving initial loss of H2; however, the pathways have very comparable free energy barriers (deltaG(is not equal)). Extrapolation to the higher temperatures, bulkier phosphine ligands, and the alkane substrates used experimentally leads to the conclusion that the pathway for the "acceptorless" dehydrogenation of alkanes is dissociative. For hydrocarbon/hydrocarbon exchanges, which are required for transfer-dehydrogenation, dissociative pathways are calculated to be much more favorable than associative pathways. We emphasize that it is the free energy, not just the internal energy or enthalpy, that must be considered for elementary steps that show changes in molecularity.