The palladium-catalyzed annulation of 1,3-dienes by o-iodoaryl acetates provides an efficient approach to biologically interesting dihydrobenzofurans. The annulation is believed to proceed via (1) oxidative addition of the aryl iodide to Pd(0), (2) syn-addition of the resulting arylpalladium complex to the 1,3-diene, (3) intramolecular coordination of the phenolic oxygen to the Pd center, (4) hydrolysis of the acetyl group, and (5) reductive elimination of Pd(0), which regenerates the catalyst. This reaction is quite general, regioselective, and stereoselective, and a wide variety of terminal, cyclic, and internal 1,3-dienes, as well as electron-rich and electron-deficient o-iodoaryl acetates, can be utilized.