A p-toluenesulfonic acid-catalyzed cascade reaction is reported for the synthesis of 4-functionalized tetrahydrocarbazolones via the reaction of 4-(indol-2-yl)-4-oxobutanal derivatives with a variety of nucleophiles in acetonitrile or hexafluoroisopropanol. After the initial intramolecular Friedel-Crafts hydroxyalkylation, the 3-indolylmethanol intermediate is subsequently activated and reacted with the external nucleophile. The reaction conditions are crucial to avoid alternative reaction pathways, allowing direct substitution reaction with thiols, (hetero)arenes, alkenes, or sulfinates. The procedure features high overall yields to access a diverse family of compounds bearing the tetrahydrocarbazole core.