The mechanism and regioselectivity of the heterocyclic C-H arylation of benzofuran and benzothiophene catalyzed by Pd(OAc) 2 complexes were investigated using the density functional theory (DFT) method. The Pd(0)L 2 (PhI) complex (L = HOAc) is proposed to be the catalytic species. Compared to the traditional Heck-type mechanism, concerted metalation-deprotonation (CMD) mechanism, and electrophilic aromatic substitution (S E Ar) mechanism for the C-H arylation, a new hydride relay exchange mechanism was proposed for the benzoheterocyclic C-H arylation catalyzed by Pd complexes, which consists of two redox processes between Pd(II) and Pd(0) species to complete the regioselective C-H activation. The calculated results indicate that the reaction along the hydride relay exchange mechanism is more favorable than those along other mechanisms, including the traditional Heck-type mechanism and the base-assisted anti-H elimination mechanism. This agrees well with the experimental results. Meanwhile, the origin for the regioselective C-H arylation was unveiled in which the α-C-H arylation products are major for the heterocyclic C-H arylation of benzofuran, but the β-C-H arylation products are major for that of benzothiophene. This study might provide a deep mechanistic understanding on the regioselective C-H activation and arylation of benzoheterocycle compounds catalyzed by transition-metal complexes.