Presented herein is a novel synthesis of pharmaceutically privileged spiroindoline derivatives via cascade reactions of N-methyl-N-nitrosoanilines with diazo homophthalimides. A group of mechanistic studies disclosed that the formation of product involves an unusual reaction mode of N-methyl-N-nitrosoaniline featuring an initial C(sp 2 )−H bond activation/alkylation followed by a C(sp 3 )−H bond activation/spiroannulation. To our knowledge, this is the first example in which N-methyl-N-nitrosoaniline acts as a C3N1 synthon to accomplish formal [4+1] spiroannulation with the participation of the N-methyl unit rather than the previously reported C2N1 synthon to undergo formal [3+2] annulation without the participation of the N-methyl unit. In general, this newly developed synthetic protocol features simple and readily accessible starting materials, valuable products, unique reaction mechanism, high efficiency and atom-economy, excellent compatibility with diverse functional groups, and ready scalability.