Cross-dehydrogenative coupling reactions between beta-ketoesters and electron-rich arenes, such as indoles, proceed with high regiochemical fidelity with a range of beta-ketoesters and indoles. The mechanism of the reaction between a prototypical beta-ketoester, ethyl 2-oxocyclopentanonecarboxylate, and N-methylindole has been studied experimentally by monitoring the temporal course of the reaction by H-1 NMR, kinetic isotope effect studies, and control experiments. DFT calculations have been carried out using a dispersion-corrected range-separated hybrid functional (omega B97X-D) to explore the basic elementary steps of the catalytic cycle. The experimental results indicate that the reaction proceeds via two catalytic cycles. Cycle A, the dehydrogenation cycle, produces an enone intermediate. The dehydrogenation is assisted by N-methylindole, which acts as a ligand for Pd(II). The computational studies agree with this conclusion, and identify the turnover-limiting step of the dehydrogenation step, which involves a change in the coordination mode of the beta-keto ester ligand from an O,O'-chelate to an beta'-bound Pd enolate. This ligand tautomerization event is assisted by the if-bound indole ligand. Subsequent scission of the beta'-C-H bond takes place via a proton-assisted electron transfer mechanism, where Pd(II) acts as an electron sink and the trifluoroacetate ligand acts as a proton acceptor, to produce the Pd(0) complex' of the enone intermediate. The coupling is completed in cycle B, where the enone is coupled with indole. Pd(TFA)(2) and TFA-catalyzed pathways were examined experimentally and computationally for this cycle, and both were found to be viable routes for the coupling step.