A mechanistic insight into the hetero‐ and homodimerizations (HETD and HOMD) of styrenes promoted by hypervalent iodine reagents (HVIRs; DMP and PIDA) and facilitated by hexafluoro2‐propanol (HFIP) to yield all‐trans cyclobutanes is reported using density functional theory (DFT) calculations. The initialization involving direct bimolecular one‐electron transfer is found to be highly unfavored, especially for the PIDA system. At this point, we suggest that the reaction is initiated with an overall two‐electron reductive cleavage of two I–O bond cleavages, affording I(III) (iodinane) and I(I) (iodobenzene) product with DMP and PIDA as oxidant, respectively. The resulting acetate groups are stabilized by the solvent HFIP through strong hydrogen bonding interaction, which promotes the electron transfer process. The nature of the electron transfer is studied in detail and found that the overall two‐electron transfer occurs within a trimolecular complex organized by π‐stacking interactions and as a stepwise and concerted mechanism for I(III) and I(V) oxidants, respectively. The reaction rate is determined by the initialization step: for I(III), the initiation is thermodynamically endergonic, whereas the endergonicity for I(V) is modest. Upon initialization, the reaction proceeds through a stepwise [2+2] pathway, involving a radical‐cationic π–π stacked transition states, where the HOMD is a dynamically competing pathway to HETD although the latter is relatively faster.