A novel strategy has been developed for the direct and regioselective ortho-acetoxylation of N-(2-benzoylphenyl)benzamides using a catalytic amount of Pd(OAc)2 (5 mol %) and a stoichiometric amount of PhI(OAc)2 in a mixture of acetic anhydride and acetic acid through the C–H activation. By using this protocol, a new series of niclosamide derivatives are produced in good yields. This is the first report on the synthesis of niclosamide and its derivatives by means of C-H functionalization. This newly developed method offers several advantages such as mild conditions, high regioselectivity, operational simplicity, and good to excellent yields. It is a short and three-step process for the synthesis of niclosamide involving acid-amine coupling, ortho-acetoxylation via C-H activation and deacylation respectively.