The present work focuses on a theoretical investigation of the plausible mechanism, determination of catalytically active species, and understanding of the regioselectivity in the InCl3-catalyzed cycloaddition of N-tosyl formaldimine with alkenes or allenes. InCl3 and InCl2+ coordinated by dichloroethane (InCl2+-DCE) were investigated as model catalytic systems. DFT data supported that InCl2+-DCE represent the plausible in situ generated catalytic species. The catalytic cycle starts from the coordination of N-tosyl formaldimine to InCl2+-DCE, generating an In-complexed iminium intermediate. This then undergoes intermolecular reaction (aza-Prins) with alkene substrate to form a carbocation intermediate, which is chemoselectively attacked by the second N-tosyl formaldimine molecule to form a formaldiminium intermediate. In a final step, this intermediate undergoes the ring closure, leading to hexahydropyrimidine along with the regeneration of catalyst. In addition, our DFT results indicate that N-tosyl formaldimine not only acts as a reactant but also accelerates the 1,3-H-shift as a proton acceptor, giving an experimentally observed allylamide product. Also, the "iminium/alkene/imine" path was supported by calculation results for diastereoselective [2 + 2 + 2] reaction using an internal alkene. Finally, the regioselectivity of the InCl3-catalyzed cycloaddition using allenes along with N-tosyl formaldimine was also analyzed.