A Pd(II)-catalyzed reaction engaging alkenyl beta-keto esters is reported that leads to the formation of 1-naphthols and an unexpected generation of arylpalladium-(II) species. Interception of the in situ generated arylpalladium(II) species in a Mizoroki-Heck reaction, together with additional mechanistic studies, provided strong evidence in support of the first aromatization-driven beta-carbon elimination process. A single Pd catalyst served to promote a series of both C-C bond forming and cleavage events in an unprecedented manner.