The palladium catalytic system was first applied to 2-arylquinazoline synthesis via hydrogen transfer methodology. Various (E)-2-nitrobenzaldehyde O-methyl oximes reacted easily with alcohols or benzyl amines to provide N-heterocyclic compounds in good to high yields. Similarly, the heterocyclic products could be prepared by the reaction of 1-(2-nitrophenyl)ethanone, urea and benzyl alcohols. In these reactions, the nitro group was reduced in situ by hydrogen generated from the alcohol dehydrogenation step.