A novel cyclization/hydrolysis of 1,5-enenitriles for the synthesis of valuable pyrrolidine-2,4-diones in the aqueous phase using I2 as the catalyst and tert-butyl hydroperoxide (TBHP) as the oxidant is reported. In the presence of the I2/TBHP system, sulfonyl hydrazides produce sulfonyl radicals, which undergo radical addition, intramolecular cyclization, hydrogen abstraction, and hydrolysis to give the final products. The use of the inexpensive and environmentally friendly I2/TBHP catalytic oxidation system in the aqueous phase makes it a benign and sustainable strategy.