The paper describes the synthesis of new 1,3,3‐triary‐1′‐methylspiro[azetidine‐2,3′‐indoline]‐2′,4‐diones from reaction of the 2‐diazo‐1,2‐diarylethanones with 3‐arylimino‐1‐methyl‐2‐indolinones. The compounds have been characterized by satisfactory analytical and spectral (IR, 1H NMR and 13C NMR) data. The diarylketenes, generated in situ from thermal decomposition of the 2‐diazo‐1,2 ‐diarylethanones, react with azomethine linkage in preference to carbonyl group leading to the formation of products.