In this article, we describe the synthesis of γ‐lactones through the reaction of sulfoxonium ylides, aldehydes, and disubstituted ketenes. The one‐pot sequential method provides access to γ‐lactones from disubstituted ketenes, in moderate to excellent yields, and with good diastereoselectivity favoring the trans‐diastereomer (dr up to 92 : 8). The reaction mechanism was investigated by performing labeling, crossover, and various control experiments. The results of those experiments support the reaction mechanism involving betaine formation, reaction of the betaine with a ketene to form an enolate intermediate, [3,3]‐sigmatropic rearrangement of an enolate intermediate, and finally, 5‐exo‐tet cyclization to afford the γ‐lactone product.