A highly selective cascade reaction that allows the direct transformation of dienallenes to spirocyclobutenes (spiro[3.4]octenes) as single diastereoisomers has been developed. The reaction involves formation of overall four C-C bonds and proceeds-via a palladium-catalyzed oxidative transformation with insertion of olefin, olefin, and carbon monoxide. Under slightly different reaction conditions, an additional CO insertion takes place to give spiro[4.4]nonenes with formation of overall five C-C bonds.