A highly efficient and atom-economic iron(III)-catalyzed three-component heteroannulation reaction between phenylpropiolamides, 3-formylchromones, and water is described for the construction of diversely multifunctionalized 2-pyridones. This protocol allows rapid access to a variety of 2-pyridones bearing an ortho-hydroxybenzoyl and a benzoyl scaffold under operationally simple conditions. The synthetic utility of the synthesized 2-pyridone scaffolds is demonstrated by transformation into biologically interesting complex heterocycles.