The mechanism of the copolymerization of carbonyl with ethylene by model cationic d(8) transition-metal complexes, (HCNH)(2)MMe(+) (M = Pd, Ni) has been studied. In addition to the hybrid density functional B3LYP method, ab initio MO methods such as MP2, CPF, and PCI-80 have been used as well. In particular, the steps of insertion of carbonyl and ethylene into M-Me and M-COMe bonds have been examined in detail. The activation barriers theoretically determined for the Pd catalyst are compared to recently reported experimental results, and temperature effects are studied for some insertion steps. The Pd-based catalyst is shown to have a better selectivity but a lower reactivity in the alternating copolymerization compared to the Ni analog.