Nitrogen ring structures are widely found in biologically active compounds and natural products, making their construction an important area of focus in modern organic synthesis. In this work, the synthesis of products containing the 1H-isoindole motif has been successfully accomplished through a rhodium-catalyzed cascade, resulting in a significant increase in molecular complexity. This reaction, which encompasses the trifunctionalization of a nitrile moiety, is triggered by the formation of a nitrile ylide with extended conjugation by reaction of a rhodium vinylcarbene with a nitrile. The mechanism has been investigated by means of density functional theory calculations and supported through experimental data, enabling us to elucidate the precise steps that explain the rare nitrile trifunctionalization. A crucial step in this trifunctionalization is the attack of the second vinylcarbene to the azepine ring formed upon 1,7-electrocyclization of the nitrile ylide with extended conjugation.