A computational investigation has been carried out to elucidate the origin of the exclusive exo-selectivity in the Pd-catalyzed cyanoesterification of strained cyclic olefins, norbornene and norbornadiene. A hybrid density functional was selected for the level of theory with a triple-zeta quality basis set, which was proposed in an earlier study to provide an experimentally sound ground state electronic structure description for palladium(II) and palladium(IV) complexes from multi-edge X-ray absorption spectroscopic measurements. Given that the product of oxidative addition can be isolated, we focused on the olefin coordination as the earliest possible origin of exo-selectivity. The calculated geometric structure for the trans-Pd(CN)(COOR)(PPh3)(2) complex at the BHandHLYP/ def2TZVP/ PCM(toluene) level is in an excellent agreement with its experimental structure from crystallographic measurements. Upon dissociation of one of its phosphane ligands, the coordinatively unsaturated trans-isomer is only 17 kJ mol(-1) away from the isomerization transition state, leading to the 14-electron cis-isomers that are 17 to 37 kJ mol(-1) lower in energy than the trans-isomers. Regardless of the initial complex for olefin coordination, the exo-isomer for the norbornene complex is at least 8 kJ mol(-1) lower than the corresponding endo-isomer. The origin of this considerable difference in Gibbs free energy can be attributed to the remarkably different steric and agostic hydrogen interactions between the methylene and the ethylene bridges of the norbornene and the adjacent cis-ligands at the Pd-II center.