The insertion mechanism of imine into the Pd-methyl and Pd-acyl bonds with a phosphene or a nitrogen-based ligand coordinated to the Pd atom has been studied with density functional theory. In agreement with the experimental findings, sigma coordination of the imine is preferred. Imine insertion into the Pd-methyl bond presents high energy barriers (>40 kcal mol(-1)) independently of the Pd-ligand used. On the contrary, insertion into the Pd-acyl bond is more facile, with energy barriers close to 20 kcal mol(-1). A geometrical and energetic analysis of the transition states suggests that the formation of the very strong amide linkage constitutes the added driving force for the imine insertion into the Pd-acyl bond.