An efficient palladium-catalyzed site-selective arylation of gamma-vinyl-gamma-lactone by aryl boronic acid has been developed. gamma-Vinyl-gamma-lactone la has been contemplated as allyl electrophile donor for allylic arylation via pi-allyl palladium intermediate using 1.5 equiv of aryl boronic acid 2. Using 3.0 equiv of the latter resulted in mono-arylation by allylic substitution and subsequent site-selective second arylation by directed allylic C-H activation giving stereoselectively anti-gamma-(aryl,styryl)-beta-hydroxy acids. Presence of O-2 was crucial for the second arylation via Pd(II) catalysis. Thus, a good synergy of dual catalysis by Pd(0) and Pd(II) was observed. This methodology has been elaborated to synthesize highly substituted tetrahydrofurans including aryl-Hagen's gland lactone analogues via intramolecular iodoetherification.