The mechanism of the formation of coumarins via the Pd-catalyzed intramolecular hydroarylation of the C-C triple bond is elucidated computationally, in corroboration with experimental data. It is shown that the reaction follows the concerted metalation-deprotonation (CMD) mechanism. The typically suspected mechanisms of ambiphilic metal ligand activation (AMLA), electrophilic aromatic substitution (EAS), and oxidative addition (OA) are suggested to be non-competitive, based on predicted conformations and energetics. Two forms of the Pd catalysts are used: Pd(OAc)2, and Pd(TFA)2. The predicted activation free energy barrier for the TFA-based catalyst is lower, both in the gas phase and in the CH2Cl2 solvent, in agreement with the experimental observations. Adding electron-withdrawing groups to the catalyst assists the first and rate-limiting step of the reaction, the deprotonation of the aromatic ring, as understood through charge analysis.