Density functional theory (DFT) calculations were carried out in a study of the oxidation of benzene to phenol by N2O on an Fe2+-ZSM-5 cluster. The catalytic cycle has been studied oil a model [Si6Al2O9H14Fe] cluster. It is found that Fe2+ is preferred over Fe1+ as a site for phenol oxidation. A high desorption value of 126.4 kJ/mol suggests that at low temperature phenol desorption is the rate limiting step on the Fe2+-ZSM-5 cluster. It competes with the N2O decomposition step. The computed activation energy for phenol desorption is in good agreement with the experimental activation energy value of 125.94 kJ/mol reported in the literature for benzene oxidation to phenol by N2O on Fe-ZSM-5.