The reaction mechanism of Pd(0)-catalyzed allene bis-selenation reactions is investigated by using density functional methods. The overall reaction mechanism has been examined. It is found that with the bulkier PMe3 ligand, the rate-determining step is the reductive elimination process, while allene insertion and reductive elimination processes are competitive for the rate-determining step with the PH3 ligand, indicating the importance of the ligand effect. For both cis and trans palladium complexes, allene insertion into the Pd−Se bond of the trans palladium complex using the internal carbon atom attached to the selenyl group is preferred among the four pathways of allene insertion processes. The formation of σ-allyl and π-allyl palladium complexes is favored over that of the σ-vinyl palladium species. By using methylallene, the regioselectivity of monosubstituted allene insertion into the Pd−Se bond is analyzed. In addition, the influence of carbon monoxide on allene bis-selenation is studied by comparing the relevant transition states. It is found that carbon monoxide prefers to activate the Pd−C bond of the σ-vinyl palladium complex generated from allene insertion into the Pd−Se bond.