The mechanism for the palladium-catalyzed allylic C鈥揌 activation was investigated using a combination of experimental and theoretical methods. A Hammett study revealed a buildup of a partial negative charge in the rate-determining step, and determination of the kinetic isotope effect (KIE) indicated that the C鈥揌 bond is broken in the turnover-limiting transition state. These experimental findings were further substantiated by carrying out a detailed density functional theory (DFT)-based investigation of the entire catalytic cycle. The DFT modeling supports a mechanism in which a coordinated acetate acts as a base in an intramolecular fashion during the C鈥揌 activation step. The reoxidation of palladium was found to reach an energy level similar to that of the C鈥揌 activation. Calculations of turnover frequencies for the entire catalytic cycle for the C鈥揌 alkylation were used to acquire a better understanding of the experimental KIE value. The good correspondence between the experimental KIE and the computed KIE values allows discrimination between scenarios where the acetate is acting in an intramolecular fashion (C鈥揌 alkylation) and an intermolecular fashion (C鈥揌 acetoxylation and C鈥揌 amination).