An efficient Rh2(II,II)-catalyzed reaction has been developed under mild conditions. This synthetic method proceeds through iodination/oxidation of readily available isoquinolinium iodide salts under aerobic conditions with good to excellent yields. 4-Iodoisoquinolin-1(2 H)-ones are important building blocks for biologically and medicinally important compounds. The developed methodology was applied to the gram-scale synthesis of a key intermediate in the synthesis of the CRTH2 antagonist CRA-680.