Ring-opening of bicyclo[1.1.0]butanes (BCBs) is emerging as a powerful strategy for 1,3-difunctionalized cyclobutanes synthesis. However, the reported radical strain-release reactions are typically plagued with diastereoselectivity issues. Herein, an atom-economic protocol for the highly chemo- and diastereoselective polar strain-release ring-opening of BCBs with hydroxyarenes catalyzed by π-acid catalyst AgBF4 has been developed. Use of readily available starting materials, low catalyst loading, high selectivity (up to >98:2 d.r.), a broad substrate scope, ease of scale-up, and versatile functionalizations of the cyclobutane products make this approach very attractive for the synthsis of 1,1,3-trisubstituted cyclobutanes. Moreover, control experiments and theoretical calculations were performed to illustrate the reaction mechanism and selectivity.