A palladium‐catalyzed intramolecular alkene thioacylation reaction initiated by the activation of thioester C(acyl)−S bonds is reported. This approach successfully suppressed decarbonylation and β‐hydrogen elimination with related acyl and alkyl metal thiolate intermediates, providing an efficient and atom‐economical method to access indanone scaffolds. Mechanistic studies provide support for C(acyl)−Pd bond insertion of olefins. The synthetic utility of this protocol is demonstrated by the further conversion of the newly formed methylene sulfide substituent.