Isoindolinone is a class of versatile N-heterocycles embedded in many bioactive molecules and natural products. The invention of new methods to synthesize these heterocyclic compounds with easily accessible chemicals is always attractive. Herein, a conceptually novel approach to access this bicyclic system via isonitrile insertion enabled 1,4-pallaidum shift is described. Compared with conventional isonitrile participated C-H bond activation, both carbon and nitrogen atoms in isonitrile moiety are engaged in new bond formation. Notably, two different isoindolinones can be obtained selectively by switching the bases employed. Mechanistic studies including DFT calculations have shed lights on the reaction mechanism and explained the selectivity led to different products. Moreover, the power of current benzolactamization is further demonstrated by providing concise routes to key intermediates of indoprofen, indobufen, aristolactams, lennoxamine and falipamil.