A reaction between 2-alkoxynaphthalene and an in situ formed azaoxyallyl cation has been reported under ambient reaction conditions. The (3 + 2) cycloaddition reaction followed by aryl C–OMe/C–OEt bond cleavage produces a variety of benzo[e]indolone derivatives. Based on the isolated intermediate from the control experiment and previous results, a possible mechanism has been drawn. Reduction of the N–O bond of the benzo[e]indolone derivative manifests the possibility of further functionalization of the products towards biologically important heterocyclic molecules.