The reaction mechanism of Pd(0)-catalyzed methylacetylene bisselenation reaction is investigated by using the density functional method. The overall reaction mechanism involves the oxidative addition, insertion, and reductive elimination steps. The regioselectivity has been investigated for the methylacetylene insertion into Pd-Se bond of both cis and trans palladium complexes. It is found that the methylacetylene insertion into Pd-Se bond of the trans palladium complex using the substituted carbon atom attached to selenyl group is preferred among the four pathways of methylacetylene insertion processes. The electronic mechanisms on the methylacetylene insertion into Pd-Se bond are discussed in terms of the Frontier molecular orbital interactions. In addition, the influence of carbon monoxide on methylacetylene bisselenation was studied and found that the methylacetylene coordination and insertion into Pd-Se bond take place first generating the Pd-C bond, followed by CO insertion into the Pd-C bond.