The reaction mechanism of the Ru(II)-catalyzed regioselective C–H allylation of indoles with allyl alcohols has been studied by density functional theory (DFT) calculations. This reaction mechanism involves five major steps: deprotonation of amide-NH, arene C–H activation, allyl alcohol insertion, β-OH elimination and protonation. Our calculation results indicate that C2–H bond allylation is better than C7–H bond allylation, which can be attributed to the stronger nucleophilicity of C2 compared to C7 in the C–Ru bond insertion of indole substrates. Furthermore, we also suggest that C–Ru bond insertion is more favorable than N–Ru bond insertion, which can be attributed to the different hybridization states of the relevant carbon and nitrogen atoms. Meanwhile, we also illustrate that the substrate cinnamyl alcohol cannot give the desired product due to the steric hindrance of the phenyl ring in cinnamyl alcohol with the indole skeleton.