The reactivity of intermediates in palladium-catalyzed allylic alkylation was investigated using DFT (B3LYP) calculations including a PB-SCRF solvation model. In the presence of both phosphine and chloride ligands, the allyl intermediate is in equilibrium between a cationic eta(3)-allylPd complex with two phosphine ligands, the corresponding neutral complex with one phosphine and one chloride ligand, and a neutral eta(1)-allylPd complex with one chloride and two phosphine ligands. The eta(1)-complex is unreactive toward nucleophiles. The cationic eta(3)-complex is the intermediate most frequently invoked in the title reaction, but in the presence of halides, the neutral, unsymmetrically substituted eta(3)-CoMplex will be formed rapidly from anionic Pd(0) complexes in solution. Since the latter will prefer both leaving group ionization and reaction with nucleophiles in the position trans to phosphorus, it can rationalize the observed "memory effect" (a regioretention) in the title reaction, even in the absence of chiral ligands.