The mechanism is investigated for cascade benz annulation of phenyl)prop-2-yn-1-yl)benzamide catalyzed by Ag(I). The oxonium-ion generation and water nucleophilic addition induces ring opening hydroxylation, dual ketonization giving 1,5-diketone intermediate. Mediated by acid, the intramolecular cyclization, water elimination affords β-naphthol, from which the nucleophilic cyclization dehydration provides desired product naphthooxazole. The side reaction of acid-activated 5-exo-dig cyclization is accompanied by synergetic synchronous hydrolysis yielding indenone. The promotion of Ag(I) lies in the absolute energy and activation barrier decrease of oxonium-ion generation and water nucleophilic addition. The mediation of acid exists in intramolecular cyclization, nucleophilic cyclization dehydration and 5-exo-dig cyclization. The solvent influence of acid is smaller than Ag(I) from the reduction degree. These results are supported by Multiwfn analysis on FMO of specific TSs and MBO value of vital bonding, breaking.