[reaction: see text] Indium trichloride was found to be an efficient catalyst for the cyclization of allylic halides and alkynes with atom transfer in methylene chloride. Mechanistic evidence supports a cationic reaction pathway with Lewis acid activation of the allylic halogen. Concomitant nucleophilic attack by the alkyne and trapping with halide led to atom transfer cyclization products. Depending on alkyne substitution, a bromine atom was transferred from the substrate or a chlorine atom was transferred from the solvent.