The mechanism of the experimentally reported phosphine-free palladium-catalysed carbonylation of aryl iodides with amines in the presence of 1,8-diazabicyclo[5.4.0]undec-7-ene (DBU) as base was investigated at the DFT level. Paths were identified for both di- and monocarbonylation, and the calculated selectivity for three different substrates was in agreement with experiment. In dicarbonylation yielding α-ketoamides, formation of the second carbon–carbon bond occurs through reductive elimination in the Pd acyl amide intermediate after DBU-assisted nucleophilic attack of an amine at a terminal CO ligand. This path yields the major product with iodobenzene and the almost exclusive product with p-methoxyiodobenzene. Two different possible pathways yield the monocarbonylated amide product. In one of them, which affords the minor product for iodobenzene, base-assisted nucleophilic attack of the amine takes place on a Pd-bound acyl ligand. For substrates with electron-withdrawing substituents, such as p-cyanoiodobenzene, aryl migration to the CO ligand is disfavoured, and this allows base-assisted amine attack at a terminal CO ligand early in the catalytic cycle. From the resulting Pd amide aryl complex, the subsequent reductive elimination occurs easily, and monocarbonylation becomes favoured.