The Pd(OAc)(2)/pyridine catalyst system is one of the most convenient and versatile catalyst systems for selective aerobic oxidation of organic substrates. This report describes the catalytic mechanism of Pd(OAc)(2)/pyridine-mediated oxidation of benzyl alcohol, which has been studied by gas-uptake kinetic methods and (1)H NMR spectroscopy. The data reveal that turnover-limiting substrate oxidation by palladium(II) proceeds by a four-step pathway involving (1) formation of an adduct between the alcohol substrate and the square-planar palladium(II) complex, (2) proton-coupled ligand substitution to generate a palladium-alkoxide species, (3) reversible dissociation of pyridine from palladium(II) to create a three-coordinate intermediate, and (4) irreversible beta-hydride elimination to produce benzaldehyde. The catalyst resting state, characterized by (1)H NMR spectroscopy, consists of an equilibrium mixture of (py)(2)Pd(OAc)(2), 1, and the alcohol adduct of this complex, 1xRCH(2)OH. These in situ spectroscopic data provide direct support for the mechanism proposed from kinetic studies. The catalyst displays higher turnover frequency at lower catalyst loading, as revealed by a nonlinear dependence of the rate on [catalyst]. This phenomenon arises from a competition between forward and reverse reaction steps that exhibit unimolecular and bimolecular dependences on [catalyst]. Finally, overoxidation of benzyl alcohol to benzoic acid, even at low levels, contributes to catalyst deactivation by formation of a less active palladium benzoate complex.