A novel method for the synthesis of phthalides and 3,4-dihydroisocoumarins via the palladium-catalyzed intramolecular benzannulation of bis-enyne and enyne-diyne systems is described. Various kinds of substituted phthalides 9 and 17 and 3,4-dihydroisocoumarins 19 were synthesized from 8, 16, and 18, respectively, in moderate to excellent yields. The benzannulation reaction proceeded chemoselectively to give the corresponding fused ring compounds A without the formation of the regioisomeric products B (eq 6). Furthermore, this methodology was applied to the synthesis of biologically active 3-n-butylphthalide 23.