A general electrophilic iodocyclization/nucleophile addition cascade transformation for 1,2-alkynediones for the synthesis of various oxygen heterocycles and access to regioselective alkyne hydroxylation is reported. Furan-tethered ynediones resulted in the construction of exo-enol ethers via carbonyl-alkyne cyclization-initiated heteroarene dearomatization, whereas other (hetero)arene-, alkenyl-, and alkyl-tethered ynediones resulted in the formation of highly functionalized 3(2H)-furanones. Importantly, the developed domino protocols involve the construction of important heterocyclic scaffolds and installation of two functional groups in a single operation. Moreover, the use of water as a nucleophile resulted in regioselective alkyne hydroxylation via furanone ring opening. The developed protocols are characterized by a wide substrate scope, and their utility has been demonstrated by a number of postsynthetic transformations.