Functionalized γ-butyrolactones are privileged structures in the field of medicinal chemistry; they are found in numerous natural products and synthetic compounds with diverse biological activities. The oxidative ring contraction of 3,4-dihydropyran-2-one derivatives represents a promising yet underappreciated strategy to access these compounds. To the best of our knowledge, very few examples of this strategy have been reported, with limited investigation of the influence of stereogenic centers on the starting dihydropyranones. We investigated the iodine(III)-mediated contraction of a representative set of dihydropyranone derivatives. The method gives rapid access to functionalized γ-butyrolactones in good yields. The reaction scope was investigated, and the method was found to support various levels of substituents, even enabling access to sterically congested quaternary centers. The stereoselectivity was investigated using chiral substrates and a chiral iodine(III) reagent.