Due to the strong greenhouse effect of SF6 gas, the novel insulating gas C5F10O has gained significant attention in recent years for its superior environmental performance. Current research on the breakdown products of C5F10O/air mixtures in the presence of micro-water during discharge faults mainly investigates the relationship between these products and the types of faults. However, the microscopic decomposition mechanisms remain under-explored, and the calculation systems for decomposition pathways and reaction rate constants of C5F10O/air mixtures are incomplete. This study explores the breakdown mechanism of C5F10O/air mixtures through the application of density functional theory (DFT) and transition state theory (TST). Initially, the formation pathways of stable compounds like CF4, C2F4, C2F6, C3F6, C3F8, C4F10, CF2O, etc., under micro-water conditions were examined. Subsequently, molecular structures involved in the reactions were calculated using the DFT-B3LYP basis set, and reaction barrier energies were determined through single-point energy calculations. Finally, rate constants for each decomposition pathway were calculated in the temperature range of 300 K–5000 K using transition state theory (TST) and variational transition state theory (VTST). The results provide key data for the kinetic modeling of C5F10O/air mixtures and establish a theoretical foundation for studying gas decomposition mechanisms in electrical equipment, promoting the application of SF6 alternatives in power systems.