Aqueous Sonogashira coupling between lipophilic terminal alkynes and aryl bromides or iodides gave moderate to high yields at 40 °C using readily available and inexpensive surfactants (2.0 w/v% in water) such as SDS and CTAB. The catalyst precursor was 2 mol% Pd(PPh₃)₂Cl₂, and included a 5 mol% Cu(I) co-catalyst for aryl iodide substrates. Aryl-bromide reagents were found to be inhibited by iodide and Cu(I). Studies under Cu(I)-free conditions reveal two competing pathways. A deprotonation pathway gives rise to the traditional Sonogashira product (3), while a carbopalladation pathway produces enyne, 5. The surfactant solution (SDS or CTAB) can be recycled up to three times for coupling between 1-octyne and 1-iodonapthalene in the presence of CuI before the yields decrease.