A palladium-catalyzed addition of arylboronic acids to phthalaldehyde, followed by an intramolecular lactonization to access 3-substituted phthalides, is described. The procedure tolerates a series of functional groups, such as methoxyl, fluoro, chloro, and trifluoromethyl groups. It represents a procedure for the synthesis of 3-substituted phthalides.