Palladium-catalyzed cycloaddition of alkynyl aryl ethers with isocyanates proceeds through o-C-H activation to afford 2-methylidene-2H-1,4-benzoxazin-3(4H)-one derivatives. Deuterium-labeling experiment shows that o-hydrogen is cleaved selectively and migrated to 2-methylidene moiety in the product. Various substrates are applied to this transformation to afford various substituted cycloadducts. 1,4-Bis(alkynoxy)benzenes can be used for the synthesis of multicondensed cycles to afford benzo [1,2-b:4,5-b']bis[1,4]oxazine-3,8-dione derivatives.