The reaction mechanism of (E)‐methyl 3‐(2‐aminophenyl)acrylate (A) with phenylisothiocyanate (B) as well as the vital roles of substrateAand solvent water were investigated under unassisted, water‐assisted, substrateA‐assisted, and water‐A‐assisted conditions. The reaction proceeds with four processes via nucleophilic addition, deprotonation and protonation, intramolecular cyclization with hydrogen transfer, and keto–enol tautomerization. According to the different H‐shift mode, two possible types of H‐shift P1 and P2 are carefully investigated to identify the most preferred pathway, differing in the NH2group deprotonation and CH group ofAprotonation processes. It is found that substrateAand water not only act as reactant and solvent, but also as catalyst, proton shuttle, and stabilizer in effectively lowering the energy barrier. Therefore, the results demonstrate that the strong donating and accepting ability of NH2group onAand the presence of bulk water are the keys to the title reaction proceed. © 2016 Wiley Periodicals, Inc.