A series of nitrile-functionalized imidazolium salts (many of which are liquid at room temperature) have been prepared. The reactivity of these salts with PdCl<SUB>2</SUB> has been studied, resulting in salts containing a tetrachloropalladate dianion or compounds in which the nitrile substituent coordinates to the palladium center. Further derivation of the latter compounds affords carbenes. All the new compounds have been characterized by spectroscopic methods and nine of them by single-crystal X-ray diffraction. The catalytic activity of the different palladium salts in Suzuki, Stille, and Heck reactions has been evaluated in some of the nitrile-functionalized ionic liquids (ILs) and compared with that of nonfunctionalized ILs, providing insights into the nature of the actual catalyst. In some instances, palladium nanoparticles have been identified, but the nature of the catalyst strongly depends on the IL employed.