An efficient kinetic resolution of readily available racemic cyclopentene-1,3-diones has been developed via a Ag(I)-catalyzed asymmetric 1,3-dipolar cycloaddition of azomethine ylides. This methodology shows good functional-group tolerance, delivering an array of synthetically valuable cyclopentene-1,3-diones with excellent stereoselectivity and generally high resolution efficiency ( s = 48-226) accompanied by the biologically important fused pyrrolidine derivatives. Notably, this strategy allows facile access to the key intermediates for the synthesis of (+)-madindolines A and B.