Irradiation of 2,5-dimethylbenzoyl oxiranes results in a relatively efficient and high-yielding formation of β-hydroxy functionalized indanones that structurally resemble biologically active pterosines. Nanosecond laser flash photolysis and quantum-chemical calculations based on density functional theory provided evidence that this photochemical transformation proceeds primarily via a photoenolization mechanism. Our study revealed considerable complexity of the mechanism and that structural modifications can significantly alter the reaction pathway and yield different products. The scope of this photochemical transformation for the synthesis of some pharmaceutically important compounds was investigated.