The mechanism is nucleophilic addition followed by elimination of methoxide. An ethoxide oxygen lone pair attacks the carbonyl carbon, while the C=O pi pair moves to oxygen:The tetrahedral intermediate collapses when its anionic oxygen reforms the carbonyl and the C–OMe bond breaks with its electron pair going to the methoxy oxygen:lithium is a coordinating counterion; it does not supply an electron pair to the acyl carbon. proton exchange with ethanol connects the methoxide produced to the ethoxide catalyst pool and gives methanol, so the net solvent-mediated exchange is methyl acetate plus ethanol to ethyl acetate plus methanol. The reversibility of the elementary acyl steps is important: changing an alkoxy group is not automatically an irreversible reaction.
The reactive occupied orbital of ethoxide is an oxygen lone pair; the acyl electrophile accepts into its carbonyl orbital. Draw the ethoxide lone pair as a directional oxygen-centred lobe directed toward an electrophile. In a lithium-ion-pair picture the low unoccupied acceptor on lithium is an empty, diffuse Li-centred orbital, with 2s/2p character depending on coordination. It should not be confused with an occupied Li–O covalent bonding pair.
For methyl acetate, the occupied frontier donor is principally an oxygen nonbonding orbital, mixed with the ester orbital system. Its low-lying reactive acceptor is , with opposite phases on carbon and oxygen and a relatively large accepting lobe on the carbonyl carbon. The corresponding sketch must show a node between the carbonyl atoms. These are chemically useful frontier-orbital descriptions; lithium alkoxide aggregation and ethanol solvation make a unique isolated-molecule orbital energy diagram an oversimplification.

