To understand the mechanism of anion assistance in palladium-catalyzed H-H, C-H, C-C and C-Cl bond activation, several mechanistic pathways for oxidative addition of Pd and PdCl- to H-2 (H-H), CH4 (C-H), C2H6 (C-C and C-H) and CH3Cl (C-Cl) were studied uniformly at the ZORA-BP86/TZ(2)P level of relativistic nonlocal density functional theory (DFT). Oxidative addition of the neutral, uncoordinated Pd atom proceeds, as reported earlier, via direct oxidative insertion (Delta H-298(double dagger) is -22 to 10 kcal/mol), whereas straight S(N)2 substitution (yielding, e.g., PdCH3+ + X-) is highly endothermic (144-237 kcal/mol) and thus not competitive. Anion assistance (i.e., going from Pd to PdCl-) lowers all activation barriers and increases the exothermicity of all model reactions studied. The effect is however selective: it favors the highly endothermic S(N)2 mechanism over direct oxidative insertion (Oxln). Activation enthalpies Delta H-298(double dagger) for oxidative insertion of PdCl- increase along C-H (-14.0 and -13.5 kcal/mol for CH4 and C2H6) approximate to C-Cl (-11.2 kcal/mol) < C-C (6.4 kcal/mol), i.e., essentially in the same order as for neutral Pd. Interestingly, in case of PdCl- + CH3Cl, the two-step mechanism of S(N)2 substitution followed by leaving-group rearrangement becomes the preferred mechanism for oxidative addition. The highest overall barrier of this pathway (-20.2 kcal/mol) drops below the barrier for direct oxidative insertion (-11.2 kcal/mol). The effect of anion assistance is analyzed using the Activation Strain model in which activation energies AE(double dagger) are decomposed into the activation strain Delta E(double dagger)strain of and the stabilizing transition state (TS) interaction Delta E(double dagger)int between the reactants in the activated complex: Delta E-double dagger = Delta E(double dagger)strain + Delta E(double dagger)int. For each type of activated bond and reaction mechanism, the activation strain Delta E(double dagger)strain adopts characteristic values which differ only moderately, within a relatively narrow range, between corresponding reactions of Pd and PdCl-. The lowering of activation barriers through anion assistance is caused by the TS interaction DE int becoming more stabilizing.