In this article, we have theoretically investigated the possible reaction mechanisms for Pd(0)-catalyzed coupling of propargylic carbonates with N-tosylhydrazones. The omega b97X-D method and C-PCM solvent model are used to describe the reaction processes. After the formation of allenylpalladium through C-O bond cleavage from propargylic carbonates, both decarboxylation and ligand exchange processes are explored. Then, depending on different conditions, we considered three possible types of reaction mechanisms, carbene insertion triggered by N-2 release, C-C coupling reactions without N2 release, and C-C coupling reactions via the out-sphere attack of diazo compound. Our results indicate that it is favorable to undergo the carbene insertion into allenylpalladium after ligand exchange with diazo compound, which is partially agreement with the experimental suggestions. Although the decarboxylation is more difficult than ligand exchange, the reaction rate could be limited by Pd-catalyzed N-2 dissociation from diazo compound. Additionally, it should be essential to select DFT-D method to describe this reaction. (C) 2014 Elsevier Ltd. All rights reserved.