We report an efficient total synthesis of (±)-phaeocaulisin A, a guaianolide sesquiterpene natural product possessing a complex tetracyclic skeleton embedded with an oxaspirolactone and a fused bicyclic lactone, four oxygen-containing stereocenters, and an 8-oxabicyclo[3.2.1]octane core. Our synthesis features a novel palladium-catalyzed cyclopropanol ring-opening carbonylation to access a key γ-ketoester, a chemo- and stereoselective aldol cyclization to form the seven-membered carbocycle, and a cascade ketalization-lactonization to construct the desired tetracyclic skeleton. With these strategically important C-C and C-O bond formation transformations, a 10-step total synthesis of (±)-phaeocaulisin A was achieved. We further developed the cyclopropanol ring-opening carbonylation chemistry to provide an alternative approach to prepare γ-ketoesters. Biologically, the penultimate intermediate with an α-methylene γ-butyrolactone moiety was identified as a promising lead compound with anticancer proliferation activity against a panel of triple-negative or HER2+ breast cancer cell lines.