A novel annulation reaction of amidines with sulfur ylides and nitrobenzenes has been developed, affording various novel 4-hydroxy-5-phenylaminoimidazoles in moderate to excellent yields. The 4-hydroxy-5-phenylaminoimidazoles have been further converted into α-ketoamide and imidazol-4-imine derivatives. Moreover, a plausible mechanism for this multicomponent reaction is proposed.