A palladium(II) catalyst system has been identified for aerobic dehydrogenation of substituted cyclohexenes to the corresponding arene derivatives. Use of sodium anthraquinone-2-sulfonate (AMS) as a cocatalyst enhances the product yields. A wide range of functional groups are tolerated in the reactions, and the scope and limitations of the method are described. The catalytic dehydrogenation of cyclohexenes is showcased in an efficient route to a phthalimide-based TRPA1 activity modulator.