When a THF solution of beta-lactam having propargyl phosphate was warmed in the presence of 5 mol % of Pd(2)(dba)(3) x CHCl(3), 20 mol % of a bidentate ligand, and sodium acetate (1.5 equiv) at 40 degrees C for 22 h, carbapenam was produced in high yield. In this reaction, the lactam nitrogen attacked the central carbon of a eta(3)-propargylpalladium complex, which was formed from propargyl phosphate and Pd(0).