A palladium(II) catalyst promotes condensation of an N-aryl imine and an alkynylbenziodoxolone derivative to afford a multisubstituted furan, whose substituents are derived from the alkynyl moiety (2-position), the imine (3- and 4-positions), and the 2-iodobenzoate moiety (5-position), along with an N-arylformamide under mild conditions. The 2-iodophenyl group of the furan product serves as a versatile handle for further transformations. A series of isotope-labeling experiments shed light on the bond reorganization process in this unusual condensation reaction, which includes cleavage of the C C triple bond and fragmentation of the carboxylate moiety.