Carbonylation of 1-arylethanols has been studied using homogeneous palladium complex catalysts in the presence of TsOH and LiCl as promoters. Effect of various parameters, such as promoters, catalyst precursors, solvents, various substrates and concentration of water on the catalytic activity as well as the product selectivity was studied. P-31 NMR experiments were carried out to investigate the nature of active palladium species formed in solution under the reaction conditions. Based on the experimental trends and 31P NMR studies, a catalytic cycle based on an anionic palladium(0) species as the active catalytic species is proposed.