We have successfully investigated the palladium catalyzed cyclization in diene system to the formation of three unusual products. By varying the reaction conditions, we observed the formation of fused cyclopentane-cyclopropane rings, fused cyclopentane-cyclopentane rings or benzene ring formation from similar types of diene substrates. The most unexpected and unusual step, the formation of cyclopropane, was studied using density functional theory based calculations.