A facile [3 + 2]cycloaddition/oxidation/aromatization cascade reaction for the synthesis of pyrrolo[2,1-a]isoquinolines and indolizino[8,7-b]indoles has been developed. This tandem approach was accomplished by employing tert-butyl hydroperoxide (TBHP) as the environmentally benign stoichiometric oxidant, with the catalysis of non-toxic tetrabutylammonium iodide (TBAI) and isopropanol as the green solvent. Gratifyingly, this protocol is highly versatile, as the construction of polycyclics could be tailored by readily available dipolarophiles. Only a catalytic amount of TBAI was required, as the hypervalent electrophilic iodine species (IOH) can be recovered in situ by oxidation with TBHP. Furthermore, for the first time, the mechanistic aspects and the putative intermediates associated with this cascade have been intercepted and characterized by online monitoring of the reaction by using ESI-MS/MS.