Small molecules containing a 2-pyridone unit received much attention due to their significance in medicinal chemistry. In this regard, development of novel methodologies via metal-catalyzed carbon-carbon bond formation by chelation-assisted C-H activation will be an attractive method to achieve therapeutically important 2-pyridone analogues and arylated acid synthons. We report our studies on a Pd(II)-catalyzed coupling reaction between methyl, aryl, heteroaryl iodides, and sp2 carbons both at β- and γ-positions using 3-amino-1-methyl-1H-pyridin-2-one as an efficient, built-in bidentate N,O-directing group (DG) toward the synthesis of pyridone derivatives. The effect of temperature, solvent, reagent equivalence, and substrate has been investigated for this DG-mediated late-stage functionalization reactions along with the crystal structure of a selected analogue. Moreover, this DG has been successfully applied for ortho-selective C(sp2)-H activation in aqueous medium in high yields to demonstrate the practicability of this present methodology.