An aerobic multicomponent reaction between monoalkyl-3,3-difluorocyclopropenes, pyridines, and arylthiols has been discovered to afford 3-arylsulfanyl-1-hydroxyindolizines. This reaction proceeds via intermediate C3-free indolizin-1-ols, easily forming free radicals in air. In the presence of arylthiols, potent radical traps, incorporation of arylsulfanyl substituent occurs at the C3 position of indolizin-1-ols by radical recombination. On the contrary, in an inert atmosphere, intermediate 1-hydroxyindolizines react with C-and N-electrophiles in a one-pot fashion. Novel, intensively colored 3-(tropon-2-yl)-indolizin-1-ols and high absorption coefficient 3-(tropolon-5-ylazo)-indolizin-1-ol dyes were synthesized in a multicomponent manner in 50−80% yields. The presence of an O-uncapped indolizin-1-ol moiety modulates the redox properties of the whole molecule, facilitating free radical formation, which is susceptible to further transformations. Three such examples were demonstrated: oxidative recyclization of 3-(2hydroxyphenylsulfanyl)-indolizin-1-ol, auto-oxidation of substituted 3,3′-biindolizine-1,1′-diol, and diacetoxyiodobenzene (DAIB)mediated dehydrogenation of 3-(tropolon-5-ylazo)-indolizin-1-ol. The latter reaction affords 3-((4,5-dioxocyclohepta-2,6-dien-1ylidene)hydrazono)-3H-indolizin-4-ium-1-olate, a mesomeric betaine, strongly absorbing light on the borders of the visible range and showing a solvatochromic effect.