The direct C3-arylation of N-unsubstituted indoles with aryl chlorides and triflates has been realized using a palladium-dihydroxyterphenylphosphine (DHTP) catalyst. The site selectivity is different from that obtained with other structurally related ligands. This unique feature of the DHTP ligand is attributed to complex formation between the lithium salts of the ligand and the indole. The method was applied to the late-stage derivatization of pharmaceuticals having a chloro group.