An effective and economical acid-promoted three-component reaction for the construction of C-P and C-C bonds for the synthesis of γ-ketophosphine oxides with water as the only byproduct was developed. Detailed mechanistic experiments confirmed that the reaction proceeds by phospha-aldol elimination, in which a benzylic carbocation is generated from the phosphorylation of aldehydes, which then reacts with ketone enolates under acidic conditions.