The mechanism of the electrophilic substitution reaction of ferrocene has been investigated using density functional theory. In particular, reactions with two hard electrophiles (protonation and acetylation) and one soft electrophile (mercuration) have been studied at the LDA and B-PW91 levels of theory using a triple-ζ STO basis set. A general description of the reactions has been obtained, leading to results in agreement with experiment. Acetylation is found to occur via exo attack, whereas mercuration follows an endo mechanism. In the case of protonation, evidence for a rapid equilibrium between metal-protonated and agostic ring-protonated ferrocene is obtained, and no clear conclusion concerning the exo or endo mechanism can be deduced. The calculated proton affinities corresponding to both metal-protonated and agostic ring-protonated structures are in excellent agreement with experiment.