The annulative coupling of 3,3'-diiodo-2,2'-bithiophene with internal alkynes efficiently proceeds in the presence of a palladium catalyst to afford the corresponding benzo[2,1-b:3,4-b']dithiophene derivatives. The dithiophenes also undergo palladium-catalyzed direct arylation with aryl bromides at the 2- and 7-positions selectively.