Skeletal reorganization is a type of fascinating transformations owing to their intriguing mechanisms and utility in complex molecule synthesis. However, only a limited amount of examples are known for most functional groups. Herein, we describe such an unusual process of oxetanes. In the presence of In(OTf)3 as catalyst, oxetane‐tethered anilines reacted unexpectedly to form 1,2‐dihydroquinolines. This process not only provides expedient access to dihydroquinolines, but also represents a new reaction of oxetane. Mechanistically, it is believed that the reaction proceeds through initial nitrogen attack rather than arene attack followed by a series of bond cleavage and formation events. Control experiments provided important insights into the mechanism.