One‐pot synthesis of spirooxindoles bearing α‐metylene‐γ‐butyrolactone moiety has been carried out by the reaction of Morita–Baylis–Hillman (MBH) carbonates of isatins and paraformaldehyde in the presence of 1,8‐diazabicyclo[5.4.0]undec‐7‐ene (DBU) in refluxing 1,2‐dichloroethane in moderate yields. The reaction proceeded via (i) the formation of resonance‐stabilized N‐ylide from DBU and the MBH carbonate of isatin, (ii) a selective γ‐attack of N‐ylide to formaldehyde, (iii) lactonization to liberate methoxide ion, (iv) addition of methoxide ion to the iminium part of DBU, (v) intramolecular hydride transfer via a six‐membered transition state, and finally (vi) elimination of DBU.