Gold redox catalysis, often facilitated by hypervalent iodine(III) reagents, offers unique reactivity but its progress is mainly hindered by an incomplete mechanistic understanding. In this study, we investigated the reaction between the gold(I) complexes [(aryl)Au(PR3)] and the hypervalent iodine(III) reagent PhICl2, both experimentally and computationally and provided an explanation for the formation of divergent products as the ligands bonded to the gold(I) center change. We tackled this essential question by uncovering an intriguing transmetalation mechanism that takes place between gold(I) and gold(III) complexes. We found that the ease of transmetalation is governed by the nucleophilicity of the gold(I) complex, [(aryl)Au(PR3)], with greater nucleophilicity leading to a lower activation energy barrier. Remarkably, transmetalation is mainly controlled by a single orbital – the gold dx2−y2 orbital. This orbital also has a profound influence on the reactivity of the oxidative addition step. In this way, the fundamental mechanistic basis of divergent outcomes in reactions of aryl gold(I) complexes with PhICl2 was established and these observations are reconciled from first principles. The theoretical model developed in this study provides a conceptual framework for anticipating the outcomes of reactions involving [(aryl)Au(PR3)] with PhICl2, thereby establishing a solid foundation for further advancements in this field.