The Pd(OAc)2/O2/DMSO catalyst system displays impressive versatility in the aerobic oxidation of organic substrates, ranging from alcohols to olefins. This report details mechanistic insights into these reactions. Dimethyl sulfoxide (DMSO) plays no redox role in the chemistry, and kinetic experiments identify the turnover-limiting step as DMSO-promoted oxidation of palladium(0) by molecular oxygen. The "chemical oxidase" pathway characterized for this catalyst system holds great promise for the design of new aerobic oxidation reactions.