A wide variety of substituted isoindolo[2,1-alpha]indoles have been prepared via annulation of internal alkynes by imines derived from o-iodoanilines in the presence of a palladium catalyst. This methodology provides an extremely efficient route for the synthesis of these tetracyclic heterocycles from readily available starting materials. The mechanism of this interesting annulation process appears to involve (1) oxidative addition of the aryl iodide to Pd(0), (2) alkyne insertion, (3) addition of the resulting vinylic palladium intermediate to the C-N double bond of the imine, (4) either electrophilic palladation of the resulting sigma-palladium intermediate onto the adjacent aromatic ring derived from the internal alkyne or oxidative addition of the neighboring aryl carbon-hydrogen bond, and (5) reduction of the tetracyclic product and Pd(0). A variety of internal acetylenes have been employed in this annulation process in which the aromatic ring of the alkyne contains either a phenyl or a heterocyclic ring.