The reduction of aryl halides in the presence of stoichiometric amounts of carbon dioxide and catalytic amounts of Pd(II)Cl2(PPh3)2 has been previously reported to result in the formation of the corresponding carboxylic acids. It is shown here that the mechanism proceeds via a catalytic cycle initiated by the one-step, two-electron reduction of the divalent palladium complex followed by oxidative addition of the aryl halide to the resulting poorly ligated zerovalent palladium center "Pd0(PPh3)2", to afford the corresponding sigma-arylpalladium(II) intermediate. One-step, two-electron reduction of the latter yields an anionic sigma-arylpalladium(0), ArPd0(PPh3)2-, which reversibly dissociates to restore the low-ligated zerovalent palladium complex, "Pd0(PPh3)2", while producing a free sigma-aryl anion, Ar-. Nucleophilic attack of carbon dioxide by the latter yields the carboxylate derivative, ArCO2-, while oxidative addition of the aryl halide to "Pd0(PPh3)2" completes the catalytic cycle. It is thus concluded that the palladium-catalyzed carboxylation proceeds only through the involvement of diamagnetic palladium-centered intermediates, in contradiction with what has been established previously for the nickel catalysis of the same reaction.