The novel dimethyl sulfoxide (DMSO)-coordinated complex [(N,O)Ni(CH(3))(DMSO)] {1-DMSO; (N,O) = kappa(2)-N,O-(2,6-(3,5-(F(3)C)(2)C(6)H(3))(2)C(6)H(3))-N=CH-(3,5-I(2)-2-OC(6)H(2))} was found to be a well-defined, very reactive precursor that enables direct observation of the activation and deactivation of neutral Ni(II) catalysts. Preparative reaction with ethylene afforded the ethyl complex [(N,O)Ni((alpha)CH(2)(beta)CH(3))(DMSO)] (2-DMSO). 2-DMSO is subject to interconversion of the (alpha)C and (beta)C moieties via an intermediate [(N,O)Ni(II)H(ethylene)] complex (this process is slow on the NMR time scale). Exposure of 1-DMSO to ethylene in DMSO solution at 55 degrees C results in partial reaction to form propylene (pseudo-first-order rate constant k(ins,Me) = 6.8 +/- 0.3 x 10(-4) s(-1) at an ethylene concentration of 0.15 M) and conversion to 2-DMSO, which catalyzes the conversion of ethylene to butenes. A relevant decomposition route of the catalyst precursor is the bimolecular elimination of ethane [DeltaH(double dagger) = (57 +/- 1) kJ mol(-1) and DeltaS(double dagger) = -(129 +/- 2) J mol(-1) K(-1) over the temperature range 55-80 degrees C]. This reaction is specific to the Ni(II)-Me complex; corresponding homocoupling of the higher Ni(II)-alkyls of the propagating species in catalytic C-C linkage of ethylene was not observed, but Ni(II)-Me reacted with Ni(II)-Et to form propane, as concluded from studies with 2-DMSO and its analogue that is perdeuterated in the Ni(II)-Et moiety. Under the reaction conditions of the aforementioned catalytic C-C linkage of ethylene, additional ethane evolves from the reaction of intermediate Ni(II)-Et with Ni(II)-H. This is independently supported by reaction of 2-DMSO with the separately prepared hydride complex [(N,O)NiH(PMe(3))] (3-PMe(3)) to afford ethane. Kinetic studies show this reaction to be bimolecular [DeltaH(double dagger) = (47 +/- 6) kJ mol(-1) and DeltaS(double dagger) = -(117 +/- 15) J mol(-1) K(-1) over the temperature range 6-35 degrees C]. In contrast to these reactions identified as decomposition routes, hydrolysis of Ni(II)-alkyls by added water (D(2)O; H(2)O) occurred only to a minor extent for the Ni(II)-Me catalyst precursor, and no clear evidence of hydrolysis was observed for higher Ni(II)-alkyls. The rate of the aforementioned insertion of ethylene in 1-DMSO and the rate of catalytic ethylene dimerization are not affected by the presence of water, indicating that water also does not compete significantly with the substrate for binding sites.