A novel protocol for the palladium-catalyzed intramolecular direct arylation of benzoic acids is reported, which combines decarboxylation and C-H activation into one efficient process. With the optimized catalyst system of palladium trifluoroacetate, silver carbonate, and the proper solvent mixture (5% DMSO/dioxane), dibenzofuran derivatives are formed in excellent yield and selectivity.