We report a phosphine-mediated direct β-acylation of α,β-unsaturated 1,3-diketones with acyl chlorides and a base. Functionalized furanones were also prepared by the reaction of cinnamic acid and acyl chloride according to our protocol via β-acylation. Our studies revealed that α,β-unsaturated 1,3-diketones with an electron-donating group at the second position favor the formation of β-acylated products, whereas those with oxygen, such as anhydrides, favor furanones via an unprecedented C-acylation/cyclization sequence.