The mechanism of the highly regioselective cycloisomerisation of dimethyl hept-1,6-dienyl-4,4-dicarboxylate (1) by a neutral pre-catalyst, [(tBuCN)(2)PdCl(2)] (8), to generate dimethyl 3,4-dimethylcyclopent-2-ene-1,1-dicarboxylate (3) has been investigated by isotopic labelling (reactions involving single and mixed samples of 1,1,2,6,7,7-[(2)H(6)]-1; 3,3,5,5-[(2)H(4)]-1; 1,7-(Z,Z)-[(2)H(2)]-1; [1,3-(13)C(1),5,7-(13)C(1)]-1 and [1,3-(13)C(1),6-(2)H(1)]-1) and by study of the reactions of dimethyl 1-aryl-hept-1,6-dienyl-4,4-dicarboxylates (9 a-e, where aryl is p-C(6)H(4)-X; X=H, OMe, Me, Cl, CF(3)) and dimethyl hept-1,5-dienyl-4,4-dicarboxylate (14), a 1,5-diene isomer of 1. The mechanism proposed involves the generation of a monochloro-bearing palladium hydride which undergoes a simple hydropalladation, carbopalladation, Pd/H dyotropy, beta-H elimination sequence to generate 3. A key point that emerges is that chelation of the 1,6-diene 1 at various stages in the mechanism plays an important role in determining the regioselectivity of the reaction. The selective generation of 3 with pre-catalysts of the form L(2)PdCl(2), as compared to the generation of dimethyl 3-methylene-4-methyl-cyclopentane-1,1-dicarboxylate (2) with pre-catalysts of the form [(MeCN)(2)Pd(allyl)]OTf (5) is ascribed to the absence of chloride ion in the latter, which makes an additional coordination site available throughout turnover. Liberation of the product 3 when [(tBuCN)(2)PdCl(2)] (8) is employed as pre-catalyst, is proposed to proceed via a mono- to bidentate switch in the pi-coordination of diene 1 (eta(2) to bis-eta(2)) displacing pi-coordinated 3 from Pd. When 1-aryl-1,6-dienes 9 are employed as substrates, the electron-donor property of the aryl group is found to influence the regioselectivity of cyclisation. Electron-withdrawing groups favour dimethyl 3-arylmethyl-4-methylcyclopent-2-ene-1,1-dicarboxylates (10), whilst electron-donating aryl groups favour 3-arylidene-4-methyl-cyclopentane-1,1-dicarboxylates (11). The regioselectivity (10/11) correlates with the Hammett sigma(+) values (rho(+)=1.3, r (2)=0.975) indicative of a strong pi-resonance contribution from the aryl ring rather than a simple sigma-inductive effect. Intermolecular modulation of regioselectivity is observed and the net effect proposed to arise through the (pi-->d) donation ability of the vinyl arene in the diene displacing product (10/11) via a mono- to bidentate switch in coordination. The isomerisation process increasingly sequesters Pd as turnover proceeds leading to a powerful inhibition mechanism and ultimately a limitation in turnover number to about 80.