We report a synthesis of imidazoquinolines via dehydrogenative coupling of 3,4-diaminoquinolines with benzylic alcohols utilizing our π-benzylpalladium(II) system in water. Readily available benzylic alcohols initially undergo catalytic dehydrogenation to form benzaldehydes, which are then reacted with 3,4-diaminoquinolines via sequential cyclocondensation/aromatization, leading to the formation of imidazoquinolines. This experimentally simple and practical one-pot procedure provides direct access to the desired products without adding strong bases, toxic oxidants or other additives. Several experiments were carried out toward an understanding of the reaction mechanism to propose plausible catalytic cycles. The dehydrogenative coupling was found to be first order with respect to the benzyl alcohol and Pd catalyst, and zero order with respect to the 3,4-diaminoquinoline substrate. A kinetic isotope effect of 3.1 was observed by separately determining the reaction rates of benzyl alcohol and benzylα,α-d 2 alcohol. Water molecules accelerate the catalytic dehydrogenative coupling, suggesting that they act as a proton donor to activate the benzylic alcohols by a hydrogen-bonding network.