A general method for the formation of N-hydroxyindoles is demonstrated through a lead-promoted intramolecular reductive cyclization of o-nitrobenzyl ketones and aldehydes under transfer hydrogenation conditions. The N-hydroxyindoles are isolated in high purity and excellent yield (>90%) in an operationally simple procedure. This new method is exemplified by a two-step synthesis of the naturally occurring 1-methoxyindole-3-carboxaldehyde, which is pivotal in many alkaloid total syntheses.