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The palladium/isocyanide catalyst is able to facilitate the intermolecular σ-bond exchange between benzocyclobutenones and silacyclobutanes. This reaction cleaves the C–C bond of the benzocyclobutenones and the C–Si bond of the silacyclobutanes, providing a unprecedented access to the eight-membered silacycles with remarkable chemo- and regioselectivities. We studied the mechanism and origins of the chemo- and regioselectivities with density functional theory (DFT) calculations. The reaction proceeds via two sequential oxidative additions (first with benzocyclobutenone and second with silacyclobutane) and two subsequent reductive eliminations (first, C–Si bond formation; second, C–C bond formation). The oxidative addition abilities of the substrates and the trans effect of silyl group synergistically control the chemoselectivity toward the heteroexchange. The homoexchange of benzocyclobutenones is unfavorable because the oxidative addition ability of benzocyclobutenone is not strong enough to facilely gen...