An efficient palladium-catalyzed oxidative nonclassical Heck reaction of arylhydrazines with allylic alcohols via C–N bond cleavage has been successfully developed. This method provides a series of β-arylated carbonyl compounds with broad functional group tolerance under base-free, simple, and mild open air reaction conditions. In the reaction, arylhydrazines with the smaller molecular weight of the leaving group were employed as the “green” arylation reagent, which released N2 and water as the byproducts under air. Mechanistic studies suggested that an aryl radical process and Pd–H complex migration reinsertion were involved. Moreover, the synthesis of the antiarrhythmic drug propafenone was completed with this transformation as the key step.