A highly enantio- and diastereoselective approach has been developed for the synthesis of chiral phosphono dihydropyranones. This approach is enabled by Pd/chiral isothiourea relay catalysis under mild reaction conditions, starting from readily available benzyl bromides, CO, and α-ketophosphonates. The cascade reaction involves the generation of a ketene intermediate from Pd-catalyzed carbonylation of benzyl bromide and subsequent chiral Lewis base catalyzed formal [4 + 2] reaction. Phosphono lactone products can also be transformed to chiral 1,5-diester products in good yield and high stereoselectivity.