Direct arylations of pyridine N-oxide (PyO), a convenient method to prepare 2-arylpyridines, catalyzed by Pd(OAc)2 and PtBu3 have been proposed to occur by the generation of a PtBu3-ligated arylpalladium acetate complex (PtBu3)Pd(Ar)(OAc) and the reaction of this complex with PyO. We provide strong evidence that (PtBu3)Pd(Ar)(OAc) does not react directly with pyridine N-oxide. Instead, our data imply that the cyclometallated complex [Pd(OAc)(tBu2PCMe2CH2)]2, which is generated from the decomposition of (PtBu3)Pd(Ar)(OAc), reacts with PyO and serves as a catalyst for the reaction of PyO with (PtBu3)Pd(Ar)(OAc). The reaction of PyO with (PtBu3)Pd(Ar)(OAc) occurs with an induction period, and the reaction of (PtBu3)Pd(Ar)(OAc) with excess PyO in the presence of [Pd(OAc)(tBu2PCMe2CH2)]2 is zero-order in (PtBu3)Pd(Ar)(OAc). Moreover, the rates of reactions of PyO with bromobenzene catalyzed by [Pd(OAc)(tBu2PCMe2CH2)]2 and [Pd(PtBu3)2] depend on the concentration of [Pd(OAc)(tBu2PCMe2CH2)]2, but not on the concentration of [Pd(PtBu3)2]. Finally, the reaction of (PtBu3)Pd(Ar)(OAc) with the model heteroarylpalladium complex containing a cyclometallated phosphine [(PEt3)Pd(2-benzothienyl)(tBu2PCMe2CH2)] rapidly formed the arylated heterocycle. Together, these data imply that the rate-determining C-H bond cleavage occurs between PyO and the cyclometallated [Pd(OAc)(tBu2PCMe2CH2)]2, rather than between PyO and (PtBu3)Pd(Ar)(OAc). In this case, the resulting heteroarylpalladium complex transfers the heteroaryl group to (PtBu3)Pd(Ar)(OAc), and C-C bondformation occurs from (PtBu3)Pd(Ar)(2-pyridyl oxide). This mechanism proposed for the direct arylation of PyO constitutes an example of C-H bond functionalization in which C-H activation occurs at one metal center, and the activated moiety undergoes functionalization after transfer to a second metal center.