A mild and efficient Rh(III)-catalyzed C-H activation/esterification reaction for the synthesis of isocoumarins has been developed. This procedure uses readily available benzoic acids and cyclic diazo-1,3-diketones as starting materials and involves domino intermolecular C-H activation in combination with intramolecular esterification to give the corresponding isocoumarins in moderate to excellent yields. This process provides a facile approach for the construction of isocoumarins containing various functional groups that does not require any additives.