Palladium-catalyzed cyclization of polycyclic aromatic o-(arylmethyl)phenol triflate esters takes place with unexpected sulfur-oxygen bond cleavage to furnish polycyclic xanthenes. These are the first examples of Pd-catalyzed cross-coupling of aryl triflate esters with arenes to form diaryl ethers. In contrast, analogous palladium-catalyzed cyclization of polycyclic o-(aryloxy)phenol triflate esters proceeds via a mechanism that involves conventional carbon-oxygen bond cleavage to furnish diaryl furans.