This paper describes iron/photoredox dual-catalyzed acyl nitrene formation and the use of acyl nitrene in constructing various C-O bonds towards phthalides. The developed reaction starts from N-methoxyl-2-alkylbenzamides. Mechanism surveys suggest the reaction involves iron nitrene-based hydrogen atom abstraction (HAA), radical-polar crossover and O-nucleophilic SN1. Distinctively, the often-reported radical rebound in previous publications is not observed. The reaction represents the first example on acyl nitrene-based synthesis of phthalides. Moreover, it also serves as a supplement for the synthesis of marketed medicines such as 3-butylphthalides (NBP), thalidomide, Pomalyst and Otezia.