A novel PdCl2-catalyzed oxidative cycloisomerization of 3-cyclopropylideneprop-2-en-1-ones, providing a facile synthesis of highly strained functionalized 2-alkylidenecyclobutanones via furan-fused cyclobutene intermediates, is reported. An interesting route to 2(3H)-furanones with a spiro-cyclopropane unit from the obtained 2-alkylidenecyclobutanones via a ring-contraction rearrangement reaction is