The carbonylation mechanisms of allylic alcohol catalyzed by [PdHCl(bppm)] complex were studied using a density functional theory (DFT) method. The results indicate that the catalytic cycle consists of three main steps: alkene insertion, CO insertion, and hydrogen transfer and product elimination. Pathways with a Pd(II) character are more favorable than that with Pd(IV) character. Methanol serves as the proton shuttle in carbonylation and reduces the energy barrier by 15.4 kcal mol(-1) below that without methanol assistance.