In this study, regio‐ and diastereoselective ring‐opening cyclization of spirocyclopropanes with phosphorus ylides stabilized by electron‐withdrawing groups were developed. The reaction of various cyclohexane‐1,3‐dione‐2‐spirocyclopropanes with phosphorus ylides bearing alkoxycarbonyl groups proceeded smoothly without any additives to provide the corresponding 6,7‐dihydroindan‐4‐ones in 32–87% yields. Cycloheptane‐1,3‐dione‐2‐spirocyclopropanes were also used in this reaction, producing the corresponding products 1,2,3,6,7,8‐hexahydroazulen‐4‐ones in 52–67% yields. The resulting [5.6]‐ and [5.7]‐fused carbocyclic products were readily converted into highly substituted indanes and azulenes, respectively, by oxidation.