<p>A straightforward multi-component method is developed to construct multifunctionalized (oxo)indoles under Pd(II) catalysis via intramolecular or intermolecular reaction pathways between electron-rich arenes, diazo compounds, and nitrosoarenes. Under the catalysis of palladium, metal carbene, generated from diazo compound, reacts with electron-rich arene to form zwitterionic intermediate, which is trapped by activated nitrosobenzene to give the desired product. It is worth noting that indole and nitrosobenzene have a competitive relationship and react with diazo compounds to produce different two-component products. Therefore, in multi-component reactions of diazo compounds, electron-rich arene, and nitrosobenzene, obtaining a single multifunctional indole product with high chemical selectivity remains a visible challenge.</p> Graphical Abstract <p></p>