This paper presents an experimental and theoretical investigation of the Pd-catalyzed Negishi coupling reaction and reveals a novel second transmetalation reaction between an Ar(1)-Pd-Ar(2) species and the organozinc reagent Ar(2)-ZnX. Understanding of this second step reveals how homocoupling and dehalogenation products are formed. Thus, the second transmetalation generates Ar(2)PdAr(2) and Ar(1)ZnCl, which upon reductive elimination and hydrolysis, respectively, give the homocoupling product Ar(2)-Ar(2) and the dehalogenation product Ar(1)H. The ratio of the cross-coupling product Ar(1)-Ar(2) and the homocoupling product Ar(2)-Ar(2) is determined by competition between the second transmetalation and reductive elimination steps. This mechanism is further supported by density functional theoretical calculations. Calculations on a series of reactions suggest a strategy in controlling the selectivity of cross-coupling and homocoupling pathways, which we have experimentally verified.