A highly efficient and facile cobalt-catalyzed C-H activation and peroxidation of 2-oxindoles was reported, which provides a new pathway for the synthesis of biologically active 3-peroxy-2-oxindoles from readily available starting materials in excellent chemical yields. The resulting products could be further transformed into various substituted 3-peroxyoxindoles in good to excellent yields. The developed method has been successfully applied to the synthesis of the natural product (±)-N-[2-(3-hydroxy-2-oxo-2,3-dihydro-1H-indol-3-yl)ethyl]acetamide.