The mechanism of arylation of N-heterocycles with unsymmetric diaryliodonium salts is elucidated. The fast and efficient N-arylation reaction is interpreted in terms of the bifunctionality of the substrate: The consecutive actions of properly oriented Lewis base and Brønsted acid centers in sufficient proximity result in the fast and efficient N-arylation. The mechanistic picture points to a promising synthetic strategy where suitably positioned nucleophilic and acidic centers enable functionalization, and it is tested experimentally.