An environmentally friendly multicomponent reaction strategy for the synthesis of functionally rich all-carbon substituted 2,3-dihydro-1H-pyrrol-2-ols "in-water" at room temperature has been reported. Water plays an indispensable role in the presence of readily available catalytic surfactants sodium dioctylsulfosuccinate and sodium dodecyl sulfate to effectuate the transformation, as has been proved by inferior results obtained in organic solvents. A wide display of substrate scope and functional group compatibility permits diversity generation in a mild operationally simple fashion. High product yields, fast reaction rate, recoverability/recyclability of the catalysts, high TON/TOF, ease of purification of final products by filtration, high AE values, and excellent E-factor count with the score as low as possible highlight the "greenness" of this approach. Feasibility of "gram-scale" synthesis and synthetic elaboration of the final product offer notable advantages. The mechanistic understanding by intercepting labile "imine" intermediate has been realized through a sequence of imine formation and Mannich-type reaction followed by intramolecular N-cyclization.