A new family of stabilized benzylic nucleophiles for the palladium-catalyzed decarboxylative allylic alkylation reaction has been developed. Allyl esters derived from 3-carboxyphthalides were found to undergo palladium-catalyzed deallylation and decarboxylation under mild reaction conditions, a process facilitated by the formation of a stabilized aromatic anion. The regioselective allylic coupling of this intermediate afforded a variety of functionalized phthalides in 73-96% yields.