Transition metal-catalyzed C-H bond halogenation is an important alternative to the highly utilized directed-lithiation methods and increases the accessibility of the synthetically valuable aryl halide compounds. However, this approach often requires impractical reagents, such as IOAc, or strong co-oxidants. Therefore, the development of methodology utilizing inexpensive oxidants and catalyst containing earth-abundant transition metals under mild experimental conditions would represent a significant advance in the field. Success in this endeavor requires a full understanding of the mechanisms and reactivity governing principles of this process. Here, we report intimate mechanistic details of the Pd(II)-catalyzed C-H iodination with molecular I2 as the sole oxidant. Namely, we elucidate the impact of the: (a) Pd-directing group (DG) interaction, (b) nature of oxidant, and (c) nature of the functionalized C-H bond [C(sp(2))-H vs C(sp(3))-H] on the Pd(II)/Pd(IV) redox and Pd(II)/Pd(II) redox-neutral mechanisms of this reaction. We find that both monomeric and dimeric Pd(II) species may act as an active catalyst during the reaction, which preferentially proceeds via the Pd(II)/Pd(II) redox-neutral electrophilic cleavage (EC) pathway for all studied substrates with a functionalized C(sp(2))-H bond. In general, a strong Pd-DG interaction increases the EC iodination barrier and reduces the I-I oxidative addition (OA) barrier. However, the increase in Pd-DG interaction alone is not enough to make the mechanistic switch from EC to OA: This occurs only upon changing to substrates with a functionalized C(sp(3))-H bond. We also investigated the impact of the nature of the electrophile on the C(sp(2))-H bond halogenation. We predicted molecular bromine (Br2) to be more effective electrophile for the C(sp(2))-H halogenation than I2. Subsequent experiments on the stoichiometric C(sp(2))-H bromination by Pd(OAc)2 and Br2 confirmed this prediction.The findings of this study advance our ability to design more efficient reactions with inexpensive oxidants under mild experimental conditions.