A diastereoselective (3 + 2) dearomative annulation of 3-substituted indoles with α-haloketones has been developed. Significant regiochemical control was observed. This methodology provides easy access to highly functionalized cyclopenta- or cyclohexa-fused indoline compounds, which are common structures of many natural products. The synthetic potential of this reaction was demonstrated in the concise syntheses of the core structures of vincorine, isocorymine, and aspidophylline A. DFT studies (B3LYP-D3/6-311++G**/MeOH) on cyclization mechanisms involving the 2-hydroxyallyl cation and its deprotonated oxyallyl cation have been performed. Under the reaction conditions, with a sparingly soluble Na2CO3 base, both species may be present and both pathways are viable. Both pathways support the formation of the experimentally observed O-bound intermediate, its transformation to the final product, the regiochemical and eventual stereochemical outcome of the kinetic cyclization product, and the thermodynamic preference for formation of the final stereoisomer.