[reaction: see text] Thermal decomposition of phenyliodonium ylide of 2-hydroxy-1,4-naphthoquinone (lawsone) in the presence of indole derivatives affords 3-acylated indoles existing in their enol forms, through a ring contraction and alpha,alpha'-dioxoketene formation reaction. The same reactants afford 3-(3-indolyl)-2-hydroxy-1,4-naphthoquinones in a copper-catalyzed reaction. Enamines, among other C-nucleophiles tested, give analogous results.