An efficient synthetic method for the selective preparation of dihydrophosphaisocoumarins and their derivatives was developed through a palladium‐catalyzed oxidative cyclization reaction of a wide range of arylphosphonic acid monoethyl esters with activated and unactivated 1,3‐dienes, including 1‐aryl‐substituted 1,3‐dienes and 1‐alkyl‐substituted 1,3‐dienes, thus opening a new avenue for the synthesis of phosphaheterocyclic compounds.magnified image