Aryliodonium ylides of 2-hydroxy-1,4-naphthoquinone react with amines in refluxing dichloromethane to afford good yields of indanedione 2-carboxamides 5, through a ring-contraction and alpha,alpha'-dioxoketene formation reaction. These amides exist in solution in an unusual enol-amide form. In contrast, the same reactants in a copper-catalyzed reaction afford arylamines and 3-iodo-4-hydroxy-1,2-naphthoquinone.