The study of the reactivity of cyclic sulfoxonium ylides has been so far neglected, in particular for reactions that forms carbon‐carbon bond at the ylide carbon atom. Herein, we describe the synthesis of cyclic sulfoxonium ylides by palladium‐catalyzed intramolecular arylation and the reactivity of these ylides in the C3‐alkylation of indoles in the presence of either an acid catalyst or an iridium catalyst. This study revealed that acid catalysis is only efficient for cyclic sulfoxonium ylides in which the tether is a six‐membered lactone, whereas iridium catalysis was better suited to the reaction of cyclic sulfoxonium ylides in which the tether is a five‐membered ring ketone or lactone. The observed chemospecificity might be due to the relative basicity of the ylides under acid catalysis and to the steric hindrance around an iridium carbene intermediate when the reaction is conducted with the iridium catalyst.