An efficient and practical method for the in situ generation of palladium nanoparticles was successfully established in a water extract of pomelo peel ash. The produced palladium nanoparticles were characterized by energy‐dispersive X‐ray spectroscopy elemental mapping, field emission scanning electron microscopy, high‐resolution transmission electron microscope, X‐ray powder diffraction, and showed high catalytic activity for selective C‐2 arylation of indoles. A series of 2‐arylindoles were smoothly installed in moderate to good yields through the direct palladium‐catalyzed cross‐coupling reactions of indoles and iodoarenes without external ligand, base, oxidant, and preinstallation directing group.