The methyl ligand of trans-CH3Pd(PPh(3))(2)I (1) exchanges with a phenyl from its PPh(3) ligand, initially giving PhPd(PPh(3))(PMePh(2))I (4). The PMePh(2) ligand of 4 then exchanges with a PPh(3) of 1 to give CH3Pd(PPh(3))(PMePh(2))I and with the PMePh(2) ligand of more 4 to give PhPd(PPh(3))(2)I and trans-PhPd(PMePh(2))(2)I. The observed rate constant for the disappearance of 1 is about 7 x 10(-5) s(-1) at 75 degrees C. The rearrangement is irreversible, does not involve a free phosphonium cation, and does not require phosphine dissociation. The rearrangement competes with transmetalation when 1 is treated with tin reagents, leading to coupling products incorporating phenyls from PPh(3). Relatively electropositive phosphine substituents seem reluctant to rearrange onto palladium.