The formation mechanism of the active catalyst in the oxidative carbonylation of terminal alkynes at the iC-H bond has been investigated for the catalytic system Pd(OAc)(2)-PPh3-p-benzoquinone (Q)-MeOH. It has been demonstrated by NMR spectroscopy, X-ray crystallography, and kinetic measurements that the catalytically active palladium is in the oxidation state 0 and is bound into complexes stabilized by p-benzoquinone (PdL(2)Q, where L = PPh3). A mechanism is suggested for the catalytic process, which includes the formation of the complex PdL(2)Q, the oxidative addition of the alkyne to this complex at the C-H bond, the insertion of CO into the Pd-C bond, and steps in which hydride hydrogen is intramolecularly transferred to the p-quinone.