New small-ring derivatives can provide valuable motifs in new chemical space for drug design. 3-Aryl-3-sulfanyl azetidines are synthesized directly from azetidine-3-ols in excellent yield by a mild Fe-catalyzed thiol alkylation. A broad range of thiols and azetidinols bearing electron-donating aromatics are successful, proceeding via an azetidine carbocation. The N-carboxybenzyl group is a requirement for good reactivity and enables the NH-azetidine to be revealed. Further reactions of the azetidine sulfides demonstrate their potential for incorporation in drug discovery programs.