Herein, a cascade [3 + 2] annulation of N-aryloxyacetamides with 3-(hetero)arylpropiolic acids affording benzofuran-2(3H)-ones via rhodium(iii)-catalyzed redox-neutral C-H functionalization/isomerization/lactonization using an internal oxidative directing group O-NHAc was achieved. This catalytic system provides a regio- and stereoselective approach to synthesize (Z)-3-(amino(aryl)methylene)benzofuran-2(3H)-ones with exclusive Z configuration selectivity, acceptable yields and good functional group tolerance. Preliminary investigations on ultraviolet-visible and fluorescence behaviors reveal that the annulation products may be applied as a promising fluorescent probe for sensing metal cations, especially for cerium (Ce3+).