In the presence of a catalytic amount of Pd(OAc)(2) and XantPhos, the three-component reaction of ynones, imines, and aryl iodides affords fully substituted alkylidene-furan-3(2H)-ones via a sequence of the Mannich reaction followed by chemo- and regioselective oxypalladation and reductive elimination. One carbon-oxygen and two carbon-carbon bonds are generated to afford the heterocycle in good to excellent yield.