Density Functional Theory (DFT) calculations at the B3LYP level and PCI-80 calculations have been carried out for the following reaction sequence: (a) association of ethylene to cationic (sigma-alkyl)palladium(II) complexes, forming pi-ethylene sigma-alkyl intermediate, (b) subsequent migratory insertion, and (c) beta-hydride elimination of the insertion product. Ethylene coordinates strongly to the ''naked'' complexes PdCH3+ and PdC2H5+ (43.9 kcal/mol and 36.0 kcal/mol respectively). Nitrogen ligands modify association exothermicity (or conversely dissociation endothermicity): Pd(NH3)(2)CH3+ (27.3 kcal/mol), Pd(NH3)(2)C2H5+ (14.9 kcal/mol) and Pd(CHNH)(2)CH3+ (29.8 kcal/mol), where (CHNH)(2) is chelating diimine. Substantial agostic interaction between metal and beta-hydrogens and differences in charge on palladium account for the differences. The migratory insertion step is endothermic for naked 12-electron (pi-ethylene)(sigma-alkyl)palladium complexes and exothermic for 16-electron complexes with two nitrogen ligands. Calculated values for the barriers of migratory insertion agree remarkably with reported values experimentally found. Thus, the barrier for migratory insertion of PdCH3+(C2H4) is calculated to 18.3 kcal/mol and 18.0 kcal/mol for the bisamine complex, whereas Brookhart recently found a value of 18.5 kcal/mol for corresponding phenanthroline complex (see ref 1). The lowest value (16.4 kcal/mol) is calculated for Pd(CHNH)(2)CH3+(C2H4) and the lowest found (17.2 kcal/mol) experimentally is for the diimine complex Pd(HCN[2,6-C6H3(i-Pr)(2)])(2)CH3+(C2H4) (see ref 2). The product of the insertion reaction readily undergoes beta-hydride elimination, which is thermoneutral for ''naked'' complexes and slightly endothermic (3.2-4.8 kcal/mol) for 16-electron complexes. The results suggest that (a) DFT calculations at the B3LYP level seem to provide values close to experimentally found energetics for this type of organometallic chemistry and (b) alkene coordination is sensitive to coordinated ligands but insertion kinetics are less so.