The carbonylation of 2'-nitrochalcones (1) in tetrahydrofuran, catalysed by Pd(TMB)(2) (TMBH = 2,4,6-trimethylbenzoic acid) at 30 atm of carbon monoxide and 170 degrees C, gave the corresponding quinolones (2), together with the N-hydroxyquinolones (3). In some cases the latter become the most abundant products; Similar reactions have been observed in the carbonylation: of 2-nitrostyrenes (4) with the same catalytic system but in the presence of TMPhen (3,4,7,8-tetramethyl-1,10-phenanthroline), which gave the corresponding indoles (5), together with the N-hydroxyindoles (6). This is the first case where the formation of N-hydroxy derivatives has been observed during-the catalytic carbonylation of organic nitro compounds. The use of Pd/C without any additive as catalyst has also been investigated.