The reaction of the functionalized bis(imidazolium) salt 1,3-bis(1-methylimidazolium-3-yl)propan-2-one diiodide with palladium(II) acetate gave as the sole product the unexpected complex cis-I 2Pd[(CHR) 2C(O)] (R = 1-methylimidazolium-3-yl). Single-crystal X-ray crystallography and infrared spectroscopy revealed a highly puckered palladacyclobutan-3-one ring with an η 3-allylic (η 3-oxodimethylenemethane) bonding disposition of Pd(II) to the [C-C(O)-C] 2- fragment. No imidazolin-2-ylidene formation was evident. The neutral complex may be viewed as zwitterionic, with the negatively charged ligands at the Pd(II) center balanced by the positive charges on the pendant imidazolium groups.