Monocyclic azetidin‐2,3‐diones provide easy extensions to spiro‐fused azetidin‐2‐ones upon p‐toluenesulfonic acid (p‐TSA) catalyzed cyclocondensation reaction with difunctionalized substrates [mercaptoacids (mercaptoacetic acid, 2‐mercaptopropionic acid, 3‐mercaptopropionic acid), ethan‐1,2‐dithiol, ortho‐difunctionalized benzenes (ortho‐phenylenediamine, ortho‐aminothiophenol)]. 1,3‐Oxathiolan‐5‐one/6‐one, 1,3‐dithiolane, 2,3‐dihydrobenzo[d]imidazole and 2,3‐dihydrobenzo[d]thiazole tethered spirocyclic azetidin‐2‐ones were obtained in good overall isolated yields (69–89 %) in a very short‐time duration (max 1 min) using toluene Dean‐Stark reflux/dichloromethane rt stirring conditions. The stereochemical and spectral studies, stabilities and diastereoisomeric ratio for trans and cis spiro‐fused products are reported. The trans and cis configuration has been assigned to spiro‐β‐lactams wrt the stereochemical relationship between sulfur atom (at spiro centre) and the vicinal methine hydrogen atom at C3/C2. The absolute configuration of one trans 1,3‐oxathiolan‐5‐one fused spirocyclic azetidin‐2‐one was clearly identified by X‐ray single crystal structure analysis.