A Ru(II)-catalyzed decarbonylative alkylation and annulation of salicylaldehydes and 2-aminobenzaldehydes with iodonium ylides has been developed for the synthesis of dibenzo[b,d]furans and NH-free carbazolones. The reaction proceeds smoothly under mild conditions with a low catalyst loading and a broad substrate compatibility. Notably, hydroxy and free amino groups were demonstrated to be the effective directing groups, enabling the successful aldehyde C-H bond activation and subsequent decarbonylation and annulation under the inexpensive Ru(II) catalyst.