The stereoselective phosphine-catalyzed (( pMeOC6H4)3P, 10-20 mol %) dearomatization of 3-NO2-indoles with allenoates is described. A range of densely functionalized indolines (18 examples) is obtained in high yields (up to 96%) under mild reaction conditions (rt, air, reagent-grade solvent). Computational simulations and labeling experiments revealed a stepwise [3 + 2]-type mechanism involving a water-assisted hydrogen shift and accounted for the diastereoselection recorded.