A microwave-assisted, palladium(II)-catalyzed cascade reaction of 2-alkynylanilines tethered with an α,β-unsaturated carbonyl moiety was established to access 5,10-dihydroindeno[1,2-b]indoles in high yields (up to 84%) in a short reaction time. This operationally simple cascade process shows 100% atom economy and allows the construction of two new five-membered rings and two new (1 C–C and 1 C–N) bonds in a single synthetic attempt. The mechanistic pathway of this reaction is visualized involving intramolecular aminopalladation (5-endo-dig) followed by carbopalladation (olefin insertion) and protonolysis steps. A systematic comparison between microwave irradiation and conventional heating methods was also performed to demonstrate the supremacy of the microwave-assisted approach. This domino reaction requires no protecting groups for the amino group and the palladium catalyst needs no ligands. To the best of our knowledge, this is the first report on microwave-assisted nucleopalladation-initiated cascade transformation.