The synthesis and mechanistic studies of new 3-[(alkylthio)methyl]-1-hydroxy-2-(4'-substituted phenyl)indoles 1 were presented. New substrates 2 were prepared by the application of efficient three-step synthesis with minor modifications, and used to produce target 1-hydroxyindoles 1. Substrates 2 were reacted with thiol nucleophiles in the presence of SnCl2·2H2O and 4Å molecular sieves to afford sixteen novel 1-hydroxyindoles 1, by a consecutive process involving nitro reduction, intramolecular cyclization, and nucleophilic 1,5-addition. Studies on the mechanistic aspects of these reactions with focus on the effects of p-substituent (X) in phenyl ring at C(1) in 2 were performed.