2-acylaryl complexes of Ni and Pd containing chelating diphosphines react with KtBuO to give metallacyclic enolate complexes. While coordination through the carbon atom is preferred in the case of Pd, the nickel O-enolate compounds are formed as the corresponding O-tautomers. Slow equilibration between O- and C-enolate tautomers is observed for the nickel complex with an unsubstituted enolate function (M-O-C=CH(2)). Theoretical DFT calculations suggest that the barrier for the tautomer exchange has its origin in the rigidity of the metallacycle. Whilst the C-enolate tautomer is unreactive towards aldehydes, the corresponding O-enolate adds to MeCHO and PhCHO, giving rise to products that retain the enolate functionality. The carbonylation of these products cleanly leads to the formation of enol lactones in a highly selective manner.