An Fe(III)-promoted oxidative annulation reaction was developed for the synthesis of 1,2-naphthoquinones. A variety of substituted arylglyoxals and internal alkynes undergo the transformation in the presence of FeCl3 at room temperature to afford the 1,2-naphthoquinone products in good yields in a short reaction time. Interestingly, the products show unusual pseudomigration of the substituent on the arene ring of arylglyoxals. A possible mechanism involving Fe(III)-promoted formation of a vinyl cation from arylglyoxal and alkyne, electrophilic addition of the vinyl cation to the ipso carbon of the aryl group to give a spiral intermediate, and then migration of the keto carbon to the ortho carbon was proposed as key steps and verified using quantum mechanics.