A palladium-catalyzed one-pot, two-step sequential reaction of 2-alkynylarylaldehydes and ketones was established to access isoquinolines under mild conditions. The initial palladium-triggered 6-endo-dig cyclization-hydration-ring opening sequence afforded the 1,5-dicarbonyl compounds and the subsequent annulation in the presence of ammonium acetate delivered the isoquinoline derivatives in good to excellent yields (up to 97%) in short reaction times. The challenging alkynes bearing pendant hydroxyl and amino functionalities have shown significant reactivity in accessing the corresponding isoquinolines in good yields. The developed domino sequence was highly regioselective and completely evaded the competitive 5-exo-dig cyclization leading to indenones unlike the gold-catalyzed literature precedent.