The aryl-aryl interchange reaction of ArPdL2I complex Im was found to follow pseudo-first-order kinetics. A marked inhibition in the presence of excess phosphine and/or excess iodide was observed, suggesting that a dissociative pathway was involved, contrary to the analogous alkyl-aryl interchange reaction studied previously. Phosphine flooding experiments could not be performed due to a competing phosphonium salt formation reaction that occurred in the presence of excess phosphine. A deuterium labeling experiment indicated that the interchange reaction proceeded via the reductive elimination to form the phosphonium salt, suggesting that excess phosphine was acting as a trap for intermediate palladium(0) species preventing the generation of the interchanged palladium(II) complex. Substituent effect studies of the interchange reaction indicated that it was inhibited by electron-withdrawing groups on both the phosphine and palladium-bound aryl groups and by increased steric bulk on both the phosphine and palladium-bound aryl groups. Under catalytic conditions, the distribution of phosphines formed from the aryl-aryl interchange during palladium-mediated cross-coupling reactions could be modeled by statistics. Various strategies for eliminating the formation of byproducts caused by the interchange during cross-coupling reactions were screened and optimized.