A palladium‐catalyzed inert C−H bond activation and cyclocarbonylation of isoquinolones leading to isoindolo[2,1‐b]isoquinoline‐5,7‐diones under 1 atm of carbon dioxide has been developed. This transformation features high regio‐ and chemo‐selectivity, step‐economy, and good functional group tolerance. Most of the corresponding products were obtained in moderate to good yields. It offers an alternative approach for the synthesis of useful diverse isoindolo[2,1‐b]isoquinoline‐5,7‐dione derivatives.