Density functional theory (DFT) computations (BP86 and M06-L) have been utilized to elucidate the detailed mechanism of a palladium-catalyzed reaction involving pyridine-type nitrogen-donor ligands that significantly expands the scope of C­(sp3)–H activation and arylation. The reaction begins with precatalyst initiation, followed by substrate binding to the Pd­(II) center through an amidate auxiliary, which directs the ensuing bicarbonate-assisted C­(sp3)–H bond activation producing five-membered-ring cyclopalladate­(II) intermediates. These Pd­(II) complexes further undergo oxidative addition with iodobenzene to form Pd­(IV) complexes, which proceed by reductive C–C elimination/coupling to give final products of arylation. The base-assisted C­(sp3)–H bond cleavage is found to be the rate-determining step, which involves hydrogen bond interactions. The mechanism unravels the intimate involvement of the added 2-picoline ligand in every phase of the reaction, explains the isolation of the cyclopalladate intermediates, agrees with the observed kinetic hydrogen isotope effect, and demonstrates the Pd­(II)/Pd­(IV) redox manifold.