An efficient method has been developed for the preparation of 1,4‐naphthoquinones via a palladium‐catalyzed reaction of 2‐aryl‐1,3‐indandiones with olefins. This reaction involves the tertiary C−H alkylation of 2‐aryl‐1,3‐indandiones with olefins to produce a tertiary alcohol, followed by C−C bond cleavage.