A Pd-catalyzed insertion and cycloaddition of CO2 and isocyanide into 2-iodoanilines under atmospheric pressure has been developed and affords quinazoline-2,4(1H,3H)-diones through the formation of new C-C, C-O, and C-N bonds under mild conditions. This reaction provides a new and practical method not only for the construction of quinazoline-2,4(1H,3H)-diones but also for the efficient utilization of carbon dioxide.