gamma-alumina transforms to theta-alumina and finally to alpha-alumina in the sequence of thermal dehydration of boehmite. We report a detailed theoretical investigation of the gamma- to theta-alumina transformation based on first-principles density-functional calculations. Although the unit cells of cubic gamma-alumina and monoclinic theta-alumina look quite different, we have identified cells for both the polytypes (with the composition Al16O24) that look very similar and can be continuously transformed one to another. The transformation may be described by a set of aluminum atom migrations between different interstitials while the oxygen atoms remain fixed. Total-energy calculations along the paths of the atomic migrations have been used to map out possible transformation pathways. The calculated conversion rate accurately predicts the experimentally measured transformation temperature. The deduced orientation relationships between the gamma- and theta-alumina forms also agree with experimental observations. The formation of several different interfaces observed in domain boundaries of theta-alumina may correspond to different migration paths of the aluminum atoms in neighboring domains during the gamma- to theta-alumina phase transition