In an automobile's exhaust system, a catalytic converter provides an environment for a chemical reaction where unburned hydrocarbons completely combust. Hence the combustion process continues but outside the engine combustion chamber where no useful energy is extracted. Toxic car gases such as unburned hydrocarbon (UHC) and carbon monoxide (CO) would not exist if the fuel to energy conversion in the engine was perfect.

A Three-Way Catlytic Converter has three simultaneous tasks: oxidation of carbon monoxide to carbon dioxide, reduction of nitrogen oxides (NOx) to nitrogen (N2), and oxidation of hydrocarbons (or unburnt fuel) to water and carbon dioxide. These three reactions are most balances at the stoichiometric point, where there is an stoiciometrically balanced amount of oxygen to fuel in the engine. When there is more oxygen than required, then the system is said to be running lean, and the system is in oxidizing conditions. The above two oxidizing reactions (oxidation of CO and hydrocarbons) are favoured. When there is more fuel than oxygen (stoichiometrically), then the engine is running rich. The reduction of NO is favoured.