2-Allylphenols react with carbon monoxide and hydrogen in the presence of catalytic quantities of a cationic palladium(II) complex [(PCy 3 ) 2 Pd(H)(H 2 O)] + BF 4 -or palladium acetate and 1,4-bis(diphenylphosphino)butane, affording five-or seven-membered ring lactones (bicyclic, tricyclic, and pentacyclic) as the principal products, often in excellent yields. Use of 2-aminostyrenes as reactants and catalytic quantities of palladium acetate and tricyclohexylphosphine, affords five-membered ring lactams in high yield and selectivity. Bicyclic and tricyclic heterocycles containing six-membered ring lactams can be synthesized from the reaction of 2-allylanilines with CO/ H 2 using the catalytic system Pd(OAc) 2 /PPh 3 , while use of 1,4-bis(diphenylphosphino)butane instead of PPh 3 in the latter process results in the formation of the seven-membered lactams benzazepinones in good yield. The regiochemical control depends on the nature of the palladium catalyst, the relative pressures of the gases, and the solvent.