The first example of Rh(III)-catalyzed cyclization of arylnitrones to indolines under external oxidant-free conditions is presented. An intermolecular coupling of arylnitrones with internal alkynes is made possible by the dual role of the Cp*Rh(III) catalyst mediating both the C-H bond activation and O-atom transfer. Synthetically important and pharmacologically privileged indoline derivatives were obtained in good yields with high diastereoselectivity.