This paper investigates the capacity rate problems for a joint decode-and-forward (JDF) based two-way relaying with network coding. We first characterize the achievable rate region for a conventional three-node network scenario along with the calculation of the corresponding maximal sum-rate. Then, for the goal of maximizing the system sum-rate, opportunistic relay selection is examined for multi-relay networks. As a result, a novel strategy for the implementation of relay selection is proposed, which depends on the instantaneous channel state and allows a single best relay to help the two-way information exchange. The JDF scheme and the scheme using relay selection are analyzed in terms of outage probability, after which the corresponding exact expressions are developed over Rayleigh fading channels. For the purpose of comparison, outage probabilities of the amplify-and-forward (AF) scheme and those of the scheme using relay selection are also derived. Finally, simulation experiments are done and performance comparisons are conducted. The results verify that the proposed strategy is an appropriate method for the implementation of relay selection and can achieve significant performance gains in terms of outage probability regardless of the symmetry or asymmetry of the channels. Compared with the AF scheme and the scheme using relay selection, the conventional JDF scheme and that using relay selection perform well at low signal-to-noise ratios (SNRs).