Lewis acid catalyzed tandem activation of the two smallest carbocycles, 3-ethoxy cyclobutanones, and donor–acceptor cyclopropanes has been demonstrated. The diphenyl-substituted 3-ethoxy cyclobutanone rearranges itself by intramolecular cyclization for the in situ generation of 1-phenyl 2-naphthol, which further undergoes remote site-selective Friedel–Crafts alkylation with donor–acceptor cyclopropane to synthesize a series of γ-naphthyl butyric acid derivatives. Further control experiments for mechanistic investigations and synthetic applications have also been carried out.