A dearomatization/deiodination/rearomatization strategy for the [3 + 2] cyclization of o-iodophenolic substrates with α,β-unsaturated imines to construct various dihydrobenzofuran-related skeletons has been established. Tolerance to different functional groups has been tested. Mechanistic studies revealed that this domino reaction was possibly realized by the deiodination and tautomerization of the key dearomatized intermediate to generate a free phenolic O radical. Moreover, an anticancer agent 4 and an α-glucosidase inhibitor 5 with high bioactivities were successfully synthesized using this novel protocol.