Density functional theory calculations were utilized to investigate a PdCl₂-catalyzed transformation involving double-bond migration (alkene isomerization), followed by condensation with methanol starting from a homoallylic alcohol. Against the proposed mechanism in the literature [Tan, J.; Org. Biomol. Chem. 2008, 6, 1344−1348], which assumes involvement of Pd^IV intermediates for both double-bond migration and condensation, our calculations preclude this supposition. The double-bond migration process is found to proceed through the cationic mechanism, accessed by the increased acidity of the allylic hydrogen in the Pd-activated alkene. The cationic mechanism commences with allylic C–H bond deprotonation by MeOH (solvent), giving an η¹-allyl complex which then rearranges through an η³- to another η¹-allyl complex, followed by protodemetalation. The allyl rearrangement was identified as an essential step in order for the double-bond migration to proceed via a lower activation energy. This double-bond migration mechanism which does not involve a Pd^IV intermediate is similar to the one reported earlier [Senan, A. M.; ACS Catal. 2016, 6, 4144−4148]. Once double-bond migration is completed, nucleophilic attack of MeOH to the Pd^II-activated new double bond initiates the condensation reaction. The nucleophilic attack transition structure gains some stability from a hydrogen bond between the entering alcohol and the available hydroxyl group at the allylic position of the isomerized substrate. In the final step of condensation, the hydroxyl abstracts the proton from the carbon-bonded MeOH to give an allyl ether product and a free water. The findings of this paper are anticipated to add value in the areas of the alkene isomerization and condensation processes involving transition metal complexes as catalysts.