A highly green and expeditious route to α-mercapto-γ-lactams from masked mercapto acids viz. 2-phenyl-2-methyl-1,3-oxathiolan-5-ones, and tosyl aziridines in an excellent yield (82–93%) is reported. The synthetic protocol involves regioselective opening of the terminal aziridine ring and mercaptoacetylative cyclisation cascades in a one-pot procedure wherein water acts as both a catalyst as well as a solvent. These reactions were carried out in aqueous media as well as under solvent-free conditions, however, under solvent-free conditions, lower yields are obtained.