A new highly efficient three-component reaction of alkyl acrylate, aldehyde and dialkyl malonate using ethyl diphenylphosphine as organocatalyst has been described. Various highly functional compounds bearing hydroxyl groups and the ester functions can be easily prepared in moderate to good yields according to our one-step procedure. The reactions are believed to proceed via Morita-Baylis-Hillman reactions of alkyl acrylate and aldehydes, followed by the Michael addition reactions of dialkyl malonates. Our reactions indicated that the intermediate species formed in the phosphine-catalyzed MBH reaction are an effective organic base to catalyze the Michael addition reactions of dialkyl malonates to the preformed MBH adducts.