A highly regioselective divergent approach for the phosphine-containing indane/indene derivatives from the ene-yneoxazolone precursors was reported. An insight into the reaction mechanism involving the phospha-1,4-addition followed by 5-exodig ring closure with a concomitant C−P/C−C bond formation was also proposed. This promising protocol utilized Hphosphonate as the phosphonating reagent in a silver-catalyzed or base-mediated cascade cyclization to construct the corresponding phosphorylated spiroindenoxazolones and amidoindenes, respectively, in good yields (up to 88% yield).