Starting from γ-ketoesters with an o-iodobenzyl group we studied a palladium- catalyzed cyclization process that stereoselectively led to bi- and tricyclic compounds in moderate to excellent yields. Four X-ray crystal structure analyses unequivocally defined the structure of crucial cyclization products. The relative configuration of the precursor compounds is essentially transferred to that of the products and the formed hydroxy group in the newly generated cyclohexane ring is consistently in trans-arrangement with respect to the methoxycarbonyl group. A transition-state model is proposed to explain the observed stereochemical outcome. This palladium-catalyzed Barbier-type reaction requires a reduction of palladium(II) back to palladium(0) which is apparently achieved by the present triethylamine.