A novel palladium catalyzed protocol for the synthesis of cyclopentene fused heterocycles from diazabicyclic alkenes and ortho-functionalized aryliodides has been elaborated. The reaction can be tuned toward the formation of either 3,4-disubstituted cyclopentenes or cyclopentene fused heterocycles by careful manipulation of the reaction parameters. A number of cyclopentene fused benzofurans and indole derivatives were prepared in excellent yield by utilizing the developed methodology.