The reactivity of (η³-allyl)palladium chloro dimers [(1-R-η³-C₃H₄)PdCl]₂ (R = H or Me) towards a sterically hindered diphosphazane ligand [EtN{P(OR)₂}₂] (R = C₆H₃(Prⁱ)₂-2,6), has been investigated under different reaction conditions. When the reaction is carried out using NH₄PF₆ as the halide scavenger, the cationic complex [(1-R-η³-C₃H₄)Pd{EtN(P(OR)₂)₂}]PF₆ (R = H or Me) is formed as the sole product. In the absence of NH₄PF₆, the initially formed cationic complex, [(η³-C₃H₅)Pd{EtN(P(OR)₂)₂}]Cl, is transformed into a mixture of chloro bridged complexes over a period of 4 days. The dinuclear complexes, [(η³-C₃H₅)Pd₂(µ-Cl)₂{P(O)(OR)₂}{P(OR)₂(NHEt)}] and [Pd(µ-Cl){P(O)(OR)₂}{P(OR)₂(NHEt)}]₂ are formed by P–N bond hydrolysis, whereas the octa-palladium complex [(η³-C₃H₅)(2-Cl-η³-C₃H₄)Pd₄(µ-Cl)₄(µ-EtN{P(OR)₂}₂)]₂, is formed as a result of nucleophilic substitution by a chloride ligand at the central carbon of an allyl fragment. The reaction of [EtN{P(OR)₂}₂] with [(η³-C₃H₅)PdCl]₂ in the presence of K₂CO₃ yields a stable dinuclear (η³-allyl)palladium(I) diphosphazane complex, [(η³-C₃H₅)[µ-EtN{P(OR)₂}₂Pd₂Cl] which contains a coordinatively unsaturated T-shaped palladium center. This complex exhibits high catalytic activity and high TON's in the catalytic hydrophenylation of norbornene.