Upon treatment with [PdCl(allyl)](2), asymmetrically substituted alpha,alpha'-diphosphanyl diazo compounds eliminate dinitrogen to afford C-chlorodiphosphanylmethanide complexes in high yields. In the presence of a chloride-abstracting agent, such as sodium tetraphenylborate, the C-chlorodiphosphanylmethanide complexes react with pyridine and trimethylphosphine, readily affording the corresponding nitrogen and phosphorus ylides. The postulated intermediate in this process, namely palladadiphosphanylcarbenes, could not be spectroscopically characterized, but their transient formation was chemically supported further by a Lewis base exchange reaction between pyridine and 4-dimethylaminopyridine. This hypothesis has also been substantiated by computing the corresponding dissociation energy using two model systems featuring methyl groups at the phosphorus. Of particular interest, density functional theory calculations reveal that these palladadiphosphanylcarbenes have a singlet ground state with an "inverse" p(pi)(2) electronic configuration and a distorted geometry associated with unusual transannular metal-carbene interactions (pi(C -> Pd) donation and sigma(Pd -> C) back-donation).