Transition‐metal‐catalyzed inert C−H bond functionalization using sulfoxonium ylides as metal carbene surrogates to replace the explosive and labile diazo compounds is synthetically attractive. Presented herein is a divergent synthesis of (CF3)‐indazolo[3,2‐a]isoquinoline derivatives based on C−H bond activation‐initiated cascade reactions of 3‐aryl‐1H‐indazoles with sulfoxonium ylides. The formation of products involves Rh(III)‐catalyzed C(sp2)−H bond metalation, carbene formation, migratory insertion, proto‐demetalation and intramolecular condensation. In general, this newly developed protocol features simple substrates, structurally diverse products, step‐economy and scalability. In addition, evaluation of the photophysical properties and anti‐proliferative activity against three human cancer cell lines of the products thus obtained showed that some of them possess potent anticancer activity with potential self‐tracking capability through fluorescence detection.