Palladium-catalyzed thioarylation of indoles by diaryl disulfides in the presence of phenyliododiacetate is reported. The directing potential of weakly coordinating aldehyde group present at 3-position of indole was exploited for regioselective C2-H thioarylation over the possible C4-H functionalization. Mechanistic studies reveal that the process involves initial generation of thioaryl radical followed by sequential C-H activation, thiolate transfer, and reductive elimination.