Polyethylene materials with in-chain-incorporated keto groups were recently enabled by nonalternating copolymerization of ethylene with carbon monoxide in the presence of Ni(II) phosphinephenolate catalysts. We elucidate the mechanism of this long-sought-for reaction by a combined theoretical DFT study of catalytically active species and the experimental study of polymer microstructures formed in pressure-reactor copolymerizations with different catalysts. The pathway leading to the desired nonalternating incorporation proceeds via the cis/trans isomerization of an alkyl-olefin intermediate as the rate-determining step. The formation of alternating motifs is determined by the barrier for the opening of the six-membered C,O-chelate by ethylene binding as the decisive step. An η2-coordination of a P-bound aromatic moiety axially oriented to the metal center is a crucial feature of these Ni(II) catalysts, which also modulates the competition between the two pathways. The conformational constraints imposed in a 2',6'-dimethoxybiphenyl moiety overall result in a desirable combination of disfavoring ethylene coordination along the alternating incorporation pathway, which is primarily governed by electronics, while not overly penalizing the nonalternating chain growth, which is primarily governed by sterics.