A new bicyclization of 4-cyano-1,2-diketones with amidines is reported for the construction of tetrahydro-5H-imidazo[4,5-b]pyridin-5-ones. The tandem reaction is proposed to involve the double condensation-cyclization of diketone with amidine, an α-ketol like rearrangement, the hydrolysis of nitrile followed by intramolecular nucleophilic addition, and the elimination of water. Features of the bicyclization method include high yields, good functional group tolerance, and mild reaction conditions.