The mechanism by which PdII precursors are reduced to catalytically active low-valent Pd species has been a subject of interest for developing better catalysts. This process is well understood for catalytic systems employing a combination of palladium(II) acetate [Pd(OAc)2] and tertiary phosphines. However, the mechanism of reduction of palladium(II) acetylacetonate [Pd(acac)2] in the presence of phosphines has not been thoroughly investigated. This is especially important in the context of Pd-catalyzed butadiene telomerization process, which uses a combination of Pd(acac)2 and tertiary phosphines in methanol to produce 1-methoxyoctadiene (MOD-1). In this work, we elucidate the steps for generating the active Pd0 species for this reaction using a combination of Pd(acac)2 and triphenylphosphine (PPh3). The investigations presented in this study provide the following key insights: (a) unification of the steps involved in the generation of the active precatalyst [PdII(acac)(PPh3)2]+; (b) elucidation of the mechanism of reduction of the precatalyst to Pd0 without MOD-1, which parallels the chemistry of the Pd(OAc)2/PPh3; and (c) the generation of PdII-octadienyl species from the reaction between the precatalyst and MOD-1, the product of the telomerization reaction. A reversible C-O bond cleavage process was identified that leads to the formation of the PdII π-octadienyl species as the active catalyst in the commercial telomerization process. These studies provide important insights into the reduction of Pd(acac)2 into active Pd0 species or PdII π-allyl species, which have wide implications for both cross-coupling catalysis as well as the telomerization reaction.