A wide variety of substituted isoquinolin-1(2H)-ones were synthesized in reasonable to good yields by the palladium-catalyzed cyclization of diethyl(2-iodoaryl)malonates with imidoyl chlorides and carbon monoxide in tetrahydrofuran. A palladium-catalyzed carbonylation-decarboxylation process may be involved in the one-step synthesis of the isoquinolin-1(2H)-ones.