Gradient-corrected density functional theory has been used to study ethylene and propene polymerization catalyzed by N∧N−PdII diimine complexes with N∧N = −NHCHCHNH− as a model ligand. Calculations have been carried out on the [N∧N−PdIIR{η2-CH2CHR‘}]+ polymerization precursor olefin complex (1; R‘ = H, CH3) as well as the alkyl insertion product [N∧N−PdIIR‘ ‘]+ (2) with the alkyl chain R containing a primary, secondary, or tertiary α-carbon. Both 1,2- and 2,1-insertions were considered for propene. The transition state TS (1,2) and the corresponding activation energies were determined for each investigated insertion process. Propene was found to prefer 2,1- over 1,2-insertion in all cases. The propene insertion barriers are higher than those of ethene and increase from 1 with R containing a primary α-carbon to R containing a tertiary α-carbon. Also considered was the isomerization process N∧N−PdIIR‘ ‘ (2) → N∧N−PdIIR‘ ‘‘ (2‘) by a β-hydrogen transfer process of the initial insertion product (2). A chain-straightening isomerization reaction following the 2,1-insertion toward alkyl groups (R‘ ‘‘) with reduced substitution of the α-carbon is not favorable. The relative stability of the isomers N∧N−PdIIR‘ ‘‘ (2‘) follows the corresponding relative stability of the R‘ ‘‘ radicals and would favor alkyl products with a high substitution on the α-carbon. However, the final distribution of the N∧N−PdIIR‘ ‘‘ (2‘) products is also determined by the polymerization precursor olefin complex [N∧N−PdIIR{η2-CH2CHR‘}]+ (1), for which steric factors favor low substitution at the α-carbon.