A novel Pd-catalyzed assembly of N-substituted phthalimides by merging of [4+1] cycloaddition and difluorocarbene transfer carbonylation from 2-iodo-N-phenylbenzamides and difluorocarbene precursors is disclosed. Difluorocarbene acts as a carbonyl source and simultaneously forms one C-C bond, one C-N bond and one CO bond to produce N-substituted phthalimides in high yields.