Ligand substitution and reductive elimination of the palladium-catalyzed C−P bond forming cross-coupling were investigated in depth. It was found that for PhPdII(PPh3)2X (X = I, Br, Cl) complexes, a step commonly referred to as ligand substitution commenced with coordination of an H-phosphonate diester, followed by its deprotonation to form an equilibrium mixture of penta- and tetracoordinate palladiumphosphonate intermediates, from which reductive elimination of the product (diethyl phenylphosphonate) occurred. For the acetate counterpart, PhPdII(PPh3)2(OAc), the incorporation of a phosphonate moiety to the complex was preceded by a rate-determining removal of the supporting phosphine ligand, facilitated by an intramolecular catalysis by the acetate group. Both the reaction steps, i.e., formation of palladiumphosphonate intermediates and reductive elimination, were significantly faster for the acetate versus halides containing PdII complexes investigated. Similar observations were found to be true also for bidentate ligand complexes [(dppp)PdII(Ph)X]; however, in this instance, a single palladiumphosphonate intermediate, (dppp)PdII(Ph)(PO(OEt)2), could be observed by 31P NMR spectroscopy. The synthetic and kinetic studies on the cross-coupling reaction of diethyl H-phosphonate with phenyl halides permitted us to elucidate a crucial catalytic role of an acetate group in PdII complexes and to propose two distinctive catalytic cycles, which complemented traditional Pd0/PdII schemes, for the palladium-mediated C−P bond formation.