Xanthone undergoes regioselective substitution and nucleophically triggered ring opening to the corresponding ketone. Hydrazone of the latter oxidatively rearranges to ortho-diacylarenes, which, then, with hydrazine gives regioselectively substituted phthalazines. Molecular modeling analysis and H-1 NMR spectra indicate an intramolecular H-bonding engaging phenol OH and phthalazine N-3 atom.