The oxidative cycloaddition of 3-subsituted quinazoline-2,4(1H,3H)-diones and alkynes has been developed. The reaction is Pd(II)-catalyzed and successfully occurs in the presence of Ag(I) oxidants. This transformation is assumed to proceed by N-H palladation of the quinazoline-2,4(1H,3H)-dione followed by ortho C-H activation. Using this methodology, a series of 5,6,7,8-tetraaryl-1H-azepino[3,2,1-ij]quinazoline-1,3(2H)-diones were obtained in moderate to good yields. The resulting tricyclic heterocycles can be converted by alkaline hydrolysis into 1H-benzo[b]azepine-9-carboxamide derivatives. DFT calculations have been carried out to shed light on the reaction mechanism.