A novel Pd^II catalyzed direct oxidative Heck–Cassar–Sonogashira type alkynylation of indoles with terminal alkynes under an atmosphere of O₂ is developed. Unlike previous methods, the reaction does not require the pregeneration of indolyl halide or alkynyl halide. Furthermore, only a catalytic amount of base is required and oxygen was used as the ultimate “green” terminal oxidant.