A cascade reaction of rhodium azavinylcarbenes with Morita-Baylis-Hillman (MBH) adducts enables a novel synthetic approach to 3,4-fused pyrroles. The cascade reaction begins with the insertion of O-H bond into rhodium azavinylcarbenes, subsquent sigmatropic rearrangement provides substituted α,β-unsaturated cyclic ketone intermediates. Then the intramolecular aza Michael addition/oxidative aromatization sequence give rise to a wide range of 3,4-fused pyrroles in good yields, and with excellent functional group compatibility.