Mechanistic aspects of the reaction of Co+ with ammonia are investigated by ab initio calculations. The potential energy surface is explored at the CASSCF level. Relative stabilities of the various stationary points on the reaction path are obtained by applying the CASPT2 technique. Binding energies for the reaction products CoNH3+, CoNH2+, and CoH+ are calculated to be 52.1, 66.7, and 51.5 kcal/mol, respectively. They correspond reasonably well with the relevant experimental values of 58.8 +/- 5, 61.3 +/- 2, and 46.6 +/- 2 kcal/mol, respectively, falling just a few kcal/mol outside the error bars of the measurements. The HCoNH2+ isomer of the CoNH3+ adduct is confirmed to represent a local minimum on the potential energy surface. It is separated from the adduct by an energy barrier of 15 kcal/mol, and its formation from the reactants is just slightly exothermic by a few kcal/mol. The H-2 elimination is experimentally not observed as a consequence of a complex tight four center transition state at about 58 kcal/mol above the ground state asymptote. The CoNH2+ and CoH+ exit channels are energetically situated below this barrier. Due to the high threshold energy, both reaction products are formed directly by simple N-H bond fission without HCoNH2+ acting as an intermediate.