2-Allylphenols react with carbon monoxide and hydrogen in the presence of catalytic quantities of a cationic palladium(II) complex [(PCy(3))(2)Pd(H)(H2O)](BF4-)-B-+ or palladium acetate and 1,4-bis(diphenylphosphino)butane, affording five- or seven-membered ring lactones (bicyclic, tricyclic, and pentacyclic) as the principal products, often in excellent yields. Use of 2-aminostyrenes as reactants and catalytic quantities of palladium acetate and tricyclohexylphosphine, affords five-membered ring lactams in high yield and selectivity. Bicyclic and tricyclic heterocycles containing six-membered ring lactams can be synthesized from the reaction of 2-allylanilines with CO/ H-2 using the catalytic system Pd(OAc)(2)/PPh(3), while use of 1,4-bis(diphenylphosphino)butane instead of PPh(3) in the latter process results in the formation of the seven-membered lactams benzazepinones in good yield, The regiochemical control depends on the nature of the palladium catalyst, the relative pressures of the gases, and the solvent.