Theoretical studies on mechanism of mutual conversion between σ-complexes and the solvent effect in ring-chlorination of toluene were performed with density functional theory (DFT). All geometry optimizations, intrinsic reaction coordinate calculations and frequency analyses were carried out at B3LYP/6-311G** level. Calculation results indicate that ortho-, meta- and para-complexes can convert mutually by overcoming a π-complex structured transition state. It was also confirmed that the mutual conversion between ortho- and para- complexes can occur directly which give answer to the experimental result that ortho-chlorotoluene (OCT) and para- chlorotoluene (PCT) are predominant products while meta-chlorotoluene (MCT) shares less than one percent in total products. In addition, a theoretical investigation of solvent effect was carried out at the same level via Onsager model, where all stagnation points were optimized completely using toluene as solvent. The free energies and activating free energies were also calculated at the same level, which decrease due to solvent effect, suggesting that it is better for toluene to be ring-chlorinated in liquid phase than in gas phase, which is in agreement with experimental results.