Isoquinolones are important structural motifs in synthetic and medicinal chemistry. Reported herein is highly atroposelective access to C-N axially chiral isoqionolones via rhodium-catalyzed C-H activation of N-alkoxy benzamides and [3+3] annulation with imidoyl sulfoxonium ylides. The coupling system proceeded efficiently under mild and redox-neutral conditions with excellent functional group tolerance as a result of dynamic kinetic transformation of the ylidic coupling reagent (carbene precursor). Experimental and computational studies revealed a pathway of C-H activation, carbene insertion, and formal nucleophilic substitution-cyclization for this coupling system. In particular, the C-N cyclization is enantio-determining and occurs via an unusual rhodium-catalyzed -bond metathesis mechanism. The benzamide, the imidoyl sulfoxonium ylide, and the chiral catalyst each played a dual role. The amide functionality acts as a directing group as well as an electrophilic acylating group, and the imidoyl sulfoxonium ylide participated as a nucleophile-functionalized carbene reagent. Applications of representative products as potentially useful chiral ligands have also been demonstrated.