A stereoselective annulation protocol was developed to construct dihydrofuranoindoles from readily available starting materials. In the presence of a bifunctional squaramide, the Friedel-Crafts alkylation/annulation cascade process occurred smoothly to provide dihydrofuranoindoles in 26-95% isolated yields exclusively as trans-diastereomers (38-99% ee). This catalytic protocol was compatible with a range of structurally distinct hydroxyindoles bearing the hydroxyl group at different positions, providing four kinds of dihydrofuranoindoles. Moreover, gram-scale synthesis and further synthetic manipulation of the product were also demonstrated.