The regioisomeric alpha-cyano ketene-O,O-dialkyl acetals 2a-e and 4a-e, sequential intermediates in the diazomethane induced conversion of indole alpha-cyano-gamma-lactones 1a-e to 2-indolyl cyanomalonates 5a-e, were isolated and characterized. Formation of the steady-state intermediate cycloprop[b]indoles 3a-e was evidenced by means of NMR and confirmed by the X-ray structure of 3c, demonstrating that the formation of 5a-e from 2a-e proceeds through two consecutive and one parallel unimolecular steps, with intermediates 3a-e formed in reversible processes. Evidence that the reversible reactions proceed via [1,3]-rearrangements is presented. The steady-state kinetic approach applied to intermediate 3 allowed a minimal two consecutive step 2 --> 4--> 5 kinetic model, in which the steric bulkiness of the alkyl substituent affects strongly the associated rate constants, k(1) and k(2), inverting the rate-determining step. The solvation effects enhanced the feasibility of these skeletal rearrangements as they stabilized the transition states to a great extent. The experimental determined thermodynamic parameters and DFT calculations suggest that these cascade rearrangements occur through [1,3]-sigmatropic mechanisms, in which asynchronous bond reorganization processes via four membered pseudopericyclic transition states are highly favorable.