A mild and effective method was developed for the construction of heterocyclic building blocks 3-hydroxyisoindolin-1-ones via a metal-free tandem transformation with excellent regioselectivity. Significantly, the strategy presents an atom-economical and environmentally friendly transformation, in which two new C–N bonds and one C–O bond are formed in water from two simple starting materials. Moreover, a broad spectrum of substrates can participate in the process effectively to produce the desired products in good yields.