A palladium-catalyzed cascade carbonylative spirolactonization of hydroxycyclopropanols has been developed to efficiently synthesize oxaspirolactones common to many complex natural products of important therapeutic value. The mild reaction conditions, high atom economy, broad substrate scope, and scalability of this new method were highlighted in expedient total syntheses of the Turkish tobacco natural products α-levantanolide and α-levantenolide in two and four steps, respectively. The hydroxycyclopropanol substrates are readily available in one step via a Kulinkovich reaction of the corresponding lactones. Mechanistic studies utilizing high-resolution electrospray ionization mass spectrometry (ESI-MS) identified several key intermediates in the catalytic cycle, as well as those related to catalyst decomposition and competitive pathways.