Using heterogeneous single-atom catalysts (SACs) in the Suzuki-Miyaura coupling (SMC) has promising economic and environmental benefits over traditionally applied palladium complexes. However, limited mechanistic understanding hinders progress in their design and implementation. Our study provides critical insights into the working principles of Pd₁@C₃N₄, a promising SAC for the SMC. We demonstrate that the base, ligand, and solvent play pivotal roles in facilitating interface formation with reaction media, activating Pd centers, and modulating competing reaction pathways. Controlling the previously overlooked interplay between base strength, reagent solubility, and surface wetting is essential for mitigating mass transfer limitations in the triphasic reaction system and promoting catalyst reusability. Optimum conditions for Pd₁@C₃N₄ require polar solvents, intermediate base strength, and increased water content. Our investigations reveal that high selectivity requires minimizing competitive coordination of bases and phosphine ligands to the Pd centers, to avoid homocoupling and alternative reductive elimination mechanisms giving rise to phosphonium side-products. Furthermore, in situ XAS investigations probing electronic structures and coordination environments of Pd sites further rationalize the base and ligand coordination, confirming and expanding upon previous computational hypotheses for Pd₁@C₃N₄. This understanding allows for designing a more selective ligand-free reaction pathway using the solvent and base to modulate the chemical environment of the active sites. We highlight the importance of environment-compatible surface tension, the creation of coordinatively available active sites, and the stabilization of partially reduced Pd centers, emphasizing the importance of mechanistic studies to advance the design of SACs in organic liquid phase reactions.