Cyclopropanes are important structural motifs found in numerous bioactive molecules, and a number of methods are available for their synthesis. However, one of the simplest cyclopropanation reactions involving the intramolecular coupling of two C-H bonds on gem-dialkyl groups has remained an elusive transformation. We demonstrate herein that this reaction is accessible using aryl bromide or triflate precursors and the 1,4-Pd shift mechanism. The use of pivalate as the base was found to be crucial to divert the mechanistic pathway toward the cyclopropane instead of the previously obtained benzocyclobutene product. Stoichiometric mechanistic studies allowed the identification of aryl- and alkylpalladium pivalates, which are in equilibrium via a five-membered palladacycle. With pivalate, a second C(sp3)-H activation leading to the four-membered palladacycle intermediate and the cyclopropane product is favored. A catalytic reaction was developed and showed a broad scope for the generation of diverse arylcyclopropanes, including valuable bicyclo[3.1.0] systems. This method was applied to a concise synthesis of lemborexant, a recently approved anti-insomnia drug.