The unique cyclization of benzamide derivatives that contain an alkyne by a Pd(0)/dialkyl(biaryl)phosphine catalytic system is reported. The reaction efficiently provides a variety of six-membered N-heterocyclic compounds that contain a fully substituted carbon center without the need for a stoichiometric additive. Mechanistic studies suggest that this unprecedented cyclization starts with the cleavage of a propargylic C-O bond, and a 1,3-diene has been identified as a relevant intermediate.