Pd(II)-catalyzed ortho-alkylation of benzoic acids with both terminal and internal epoxides affords 3,4-dihydroisocoumarins in one step. The presence of potassium countercations is crucial for this reaction. Monoprotected amino acid ligands significantly promote this reaction, enabling the development of a practical C–H alkylation reaction using 0.5 mol % Pd catalyst. The inversion of stereochemistry in the C–H alkylation step is consistent with a redox-neutral SN2 nucleophilic ring-opening process as opposed to a Pd(II)/Pd(IV) pathway.