In ethanol medium disodium tetrachloropalladate selectively activates the C8–H bond of naphthyl group present in 1-(2′-hydroxy-5′-methylphenylazo)naphthalene(H 2 L 1 ) at room temperature and produces cyclometallate [PdL 1 (PPh 3 )] in presence of triphenylphosphine. Under similar reaction condition, the C(naphthyl)–H bond activation of 1-(2′-methoxy-5′-methylphenylazo)naphthalene (HL 2 ) occurs at C2 and cyclopalladate [PdL 2 Cl] has been isolated as product. The labile nature of the Pd ←:O(R) bond of [PdL 2 Cl] in solution is established from the electronic and NMR spectra. Cyclopalladate [PdL 2 Cl] reacts with thallium(I) cyclopentadienide and yields [PdL 2 (Cp)], where both σ- and π-palladium(II)-carbon bonds exist. All the cyclopalladates have been isolated in pure form and characterized on the basis of their spectral data. The molecular structure of cyclopalladate [PdL 1 (PPh 3 )] has been determined by single crystal X-ray diffraction method. In [PdL 1 (PPh 3 )], the metal ion is bonded to C8 (peri-position of 1-azonaphthyl fagment), N1 of diazene function, O1 of phenolic group and P1 of triphenylphosphine. The tetra-coordination around palladium(II) is in a distorted square-planar geometry.