Square-planar complexes of divalent palladium, [L2PdCl2], where L = tertiary phosphine, are active catalysts for the biphasic carbonylation of aromatic halides, including chloroarenes (when L = tricyclohexylphosphine), to the corresponding carboxylic acids. The first step of the process is the aqueous alkali (KOH) induced disproportionation of [L2PdCl2] to the phosphine oxide and the Pd(O) species, [LPd]. Oxidative addition of aryl halides to the latter, followed by ligand exchange, results in organometallic hydroxo dimers, [L2Ar2Pd2(mu-OH)2], 1-3, in high yields. The disproportionation reaction proceeds with retention of configuration at phosphorus (demonstrated for L = (R)-benzylmethylphenylphosphine). Carbonylation of 1, Ar = Ph, in the presence of iodobenzene leads to benzoic acid and the aroyl complex [(ArCO)(PPh3)Pd(mu-I)]2, 6, where Ar = Ph, (complex 7, Ar = p-tolyl, and p-toluic acid were similarly formed from 3, Ar = p-tolyl, and p-iodotoluene). While complexes 6 and 7 are not prone to facile decarbonylation, they do undergo slow exchange with free carbon monoxide. Reactions of 6 and 7 with aqueous KOH in the presence of the corresponding iodoarenes afford the carboxylic acid anion and the hydroxo complexes 1 and 3, respectively. These reactions likely involve aroyl bridging palladium dimers as intermediates. The new complexes 1-7 exist in solution as mixtures of cis and trans isomers. However, only the trans geometry was found in the X-ray structures of 1 and 6. Crystallographic data for 1: space group P 2(1)/n, a = 13.668(3) angstrom, b = 23.168(7) angstrom, c = 14.358(3) angstrom, alpha = 90.00-degrees, beta = 93.97(2)-degrees, gamma = 90.00-degrees, V = 4535.6(2) angstrom3, Z = 4, R = 0.071, and R(W) = 0.082. For 6: space group P-1, a = 11.413(4) angstrom, b = 12.597(4) angstrom, c = 10.494(3) angstrom, alpha = 101.37(3)-degrees, beta = 105.22(3)-degrees, gamma = 74.17(3)-degrees, V = 1387.7(8) angstrom3, Z = 1, R = 0.039, and R(W) = 0.035.