The mechanism of the direct insertion of molecular oxygen into a palladium hydride bond has been elucidated using quantum mechanics (B3LYP/LACVP^(**) with the PBF continuum solvent model). The key step is found to be the abstraction of the hydrogen atom resulting in the formation of a Pd^I/HO_2 (triplet) radical pair, which then proceeds to form a singlet palladium hydroperoxo species. Potential palladium(0) pathways were explored and were found to be inaccessible. The results are in agreement with recent experimental results and are consistent with our previously predicted mechanism for an analogue system
