A palladium-catalyzed aerobic oxidative annulation of indoles is described. We have demonstrated that a variety of factors influence these cyclizations, and in particular the electronic nature of the pyridine ligand is crucial. It is also remarkable that these oxidative cyclizations can proceed in good yield despite background oxidative decomposition pathways, testament to the facile nature with which molecular oxygen can serve as the direct oxidant for Pd(0). We have also shown that the mechanism most likely involves initial indole palladation (formal C-H bond activation) followed by migratory insertion and beta-hydrogen elimination.