The origin of the regio- and stereocontrol in the Pd-catalyzed γ-arylation of α,β-unsaturated aldehydes was theoretically investigated. The reaction proceeds via isomerization of different Pd intermediates followed by reductive elimination. Up to 10 Pd isomers were identified and are in equilibrium controlled by an unprecedented swinging palladium mechanism. The subsequent reductive elimination step showed that the formation of the favored γ-arylated product was achieved by a bending of the aryl moiety. Computational studies also shed light on the mechanism of the arylation reaction and are in good agreement with the experimental observations where only the γ-arylated product was detected. All geometries were optimized by density functional theory using the B3LYP functional with standard double-ζ basis set (LANL2DZ) and effective core potentials for the palladium center and the 6-311G(d,p) basis sets for other atoms. The addition of dispersion forces and solvent corrections were found to play an important role in the description of the system.