The mechanism of the addition of indazole (Ind)—a bifunctional aromatic N,NH-nucleophile—to cyclohexyl isocyanide coordinated to the palladium(II) center in the model complex cis-[PdCl ₂ (CNMe)(CNCy)] (1) to give the corresponding aminocarbene ligand was investigated in detail by theoretical (DFT) methods. The most plausible mechanism of this reaction is that of the associative type involving nucleophilic attack of Ind by its unprotonated N atom at the isocyanide carbon atom followed by the stepwise proton transfer from the nucleophile molecule to the isocyanide N atom via deprotonation/protonation steps. Two reaction channels based on two tautomeric forms of indazole were found. The channel leading to the experimentally isolated aminocarbene product is based on the less stable tautomeric form. Another channel based on the more stable tautomer of Ind is slightly kinetically more favorable but it is endergonic. Thus, the regioselectivity of this reaction is thermodynamically rather than kinetically driven. The bonding situation in key species was analyzed.