Catalytic modification of C−H bonds using palladium is highly appealing, but transformations involving alkyl-Pd(II) intermediates with β-hydrogens are challenging due to the propensity for β-hydride elimination. To address this, selective arylation of sp3 C−H bonds in amides and alcohols has been achieved using divalent palladium as an excited-state transition metal (TM) species at room temperature. Our approach unveils a non-redox-neutral pathway to achieve C(sp3)–C(sp2) cross-couplings, utilizing aryl iodides as both hydrogen atom transfer (HAT) and arylating agents for the first time under Pd-photochemical conditions. The mechanism involves photo-induced Pd(II)-catalyzed aryl radical generation, HAT, and aryl migration, effectively bypassing the common β-hydride elimination and annulation pathways. Mechanistic investigations using isotope-labeled compounds and density functional theory (DFT) studies support the mechanistic rationale, affirming both the feasibility and intricacies of this effective transformation.