A retro-aldol reaction of two β-hydroxy compounds in synergy with Pd-catalyzed cross-coupling of aryl halides is reported herein, which produces selectively mono-α-arylated ketones and esters in good yields. This reaction is compatible with a broad range of aryl iodides, bromides, chlorides, and triflates and can tolerate an array of functional groups on the aromatic ring. Ready scale-up of this reaction to gram level is applicable without an appreciable decrease in the reaction yield. Furthermore, concise syntheses of biologically active isocoumarin and indole derivatives have been achieved to greatly demonstrate the synthetic value of this retro-aldol reaction. Finally, the reaction mechanism has been discussed on the basis of experimental observations and DFT computational results. A regulated six-membered-ring transition structure has been located for the key retro-aldol C−C cleavage, which constitutes the rate-determining step of a full catalytic cycle. The concept of C−C activation by retro-aldol reaction may also find applications in other fundamental reactions.