The palladium(II)-catalyzed carbocyclization of benzenecarbaldehydes with internal alkynes to afford 2,3-disubstituted indenones was reported. The annulation reaction proceeded through the transmetalation of Pd(II) with an aromatic aldehyde and the insertion of internal alkynes, followed by cyclization via the intramolecular nucleophilic addition of intermediate organopalladium(II) species to the aldehyde group. This reaction proceeded in moderate to good yields with high regioselectivity.