A simple and efficient Rh(III)-catalyzed C-H activation and tandem intramolecular cyclization for the synthesis of isocoumarins has been developed. The protocol uses easily available primary benzamides and cyclic 2-diazo-1,3-diketones as starting materials. This reaction proceeds via C-C and C-O bond formation in a single reaction vessel, and the corresponding isocoumarins were obtained in moderate to excellent yields (58%–97%). The well established protocol showed high functional group tolerance, which provided an efficient and alternative route to isocoumarin backbone.