A Pd-catalyzed and photoinduced benzylic cascade benzylic C–H carbonylation/annulation reaction is realized under mild conditions (35 °C, 2 bar CO). The use of a catalytic amount of base is crucial for the reaction to achieve high yields. The reaction consists of a Pd-catalyzed generation of amidyl radical from O-benzyl hydroxylamide substrates and 1,5-HAT to give a benzylic radical, followed by carbonylation and annulation. Various homophthalimides, which could be readily converted to a number of bioactive compounds, could be obtained with up to 96% yield.