The reaction of molecular oxygen with palladium(0) centers is a key step in Pd-catalyzed aerobic oxidation reactions. The present study provides a density functional theory (DFT) computational analysis of the mechanism and electronic structural features of the reversible, associative exchange between 02 and ethylene at an ethylenediamine (en)coordinated palladium(0) center. Salient features of the mechanism include: (1) the near thermoneutrality of the O-2-alkene exchange reaction, consistent with experimentally observed reversible exchange between O-2 and alkenes at well-defined Pd centers, (2) end-on activation of triplet O-2 at an apical site of the trigonal Pd center, resulting in formation of a Pd-1(eta(1)-superoxide) species, (3) rearrangement of the Pd-1(eta(1)-superoxide) species into a pseudooctahedral (en)Pd(eta(2)-O-2)(eta(2)-C2H4) species with concomitant crossing from the triplet to singlet energy surfaces, and (4) release of alkene from an axial face of (en)Pd eta(2)-peroxo) with a geometry in which the alkene leaves with an endon trajectory (involving an interaction of the Pd d(2), and alkene pi* orbitals). This study highlights the similar reactivity and reaction pathways of alkenes and O-2 with an electron-rich metal center, despite the different ground-state electronic configurations of these molecules (closed-shell singlet and open-shell triplet, respectively).