Modification of a triarylphosphine with a cholate moiety affords a new ligand, 1, which is effective in palladium-catalyzed Heck cross-couplings between acrylates and aryl iodides under mild, aqueous reaction conditions. High yields, up to 99%, wereachieved in water at 40 o C. In competition studies, a more hydrophobic substrate (n-Bu acrylate) was preferred over the least hydrophobic substrate (methyl acrylate), supportive of a localized hydrophobic microenvironment near the catalytic center. The enhanced reactivity and selectivity for hydrophobic substrates disappeared when the local hydrophobicity was eliminated using a standard water-soluble phosphine or in organic solvents.