1,3-Indanedione is one of typical cyclic 1,3-dicarbonyl compounds with one methylene unit, two carbonyl groups and fused phenyl ring. Thus, it has three contiguous reactive electrophilic and nucleophilic sites. On the other hand, 1,3-indanedione undergoes homopolymerization to form several cyclic compounds with polycarbonyl groups under acidic or basic medium. 2-Arylidene-1,3-indanediones derived from condensation of aromatic aldehydes with 1,3-indanedione are also reactive α,β-unsaturated carbonyl compounds. Therefore, 1,3-indanedione has diverse reactivities and is the key substrate in domino and multicomponent reactions. It has been widely employed to construct various spiro, bridged and fused cyclic compounds. The recent achievements on multicomponent reactions involving 1,3-indanedione from the structures of the target compounds and the important applications on the syntheses of biologically important indanone-containing carbocyclic and heterocyclic compounds are summarized. The effects of catalyst, reaction mechanism, experimental results, reaction characteristics and limitations are briefly discussed. At last, the future development on the diverse reactions of 1,3-indanedione is also prospected.