Optically active phthalides are prevalent in many natural and bioactive products. Herein, a novel dynamic kinetic resolution of iso-benzofuranone derivatives through palladium-catalyzed asymmetric allylic alkylation has been developed to synthesize phthalide de-rivatives bearing vicinal quaternary and tertiary stereocenters with high yields, showing excellent regio-, enantio- and diastereoselec-tivity. Furthermore, gram-scale experiment underwent smoothly and the transformation of product could build a bridged bicyclic skeleton.