A new and flexible three-component reaction has been established for the highly diastereoselective synthesis of bicyclic hexahydroquinoline-2,5-diones and pyrazolo[3,4-b]pyridin-6(7H)-ones using low-cost and readily accessible 4-hydroxypyran-2-ones, aromatic aldehydes, N-aryl enaminones and pyrazole-5-amines. This reaction process involves a Knoevenagel condensation/Michael addition cyclization/ring-opening of 4-hydroxypyran-2-one sequence.