Six-membered cyclic nitronates (5,6-dihydro-4H-1,2-oxazine-N-oxides) react with Kobayashi's aryne precursors producing 3-(2-hydroxyaryl)-substituted 1,2-oxazines via deoxygenative C-H arylation. The process involves a hitherto unknown 1,3-dipolar cycloaddition of nitronate to the aryne to give an unusual tricyclic nitroso acetal, in which the N-O bond of the isoxazoline ring is selectively cleaved upon the action of a base (CsF) or an acid (TFA). The transient cycloadducts were isolated and characterized in some cases. The synthetic potential of the obtained 3-(2-hydroxyaryl)-substituted 1,2-oxazines was demonstrated by their stereoselective reduction to 1,4-amino alcohols and reductive 1,2-oxazine ring contraction to tetrahydrofuran derivatives.