Rare earth carbenes exclusively exhibit Wittig-type reactivity with carbonyl compounds to afford alkenes. Here, we report that yttrium carbenes can effect regioselective ortho-C-H activation and sequential C-C and C-O bond formation reactions of aryl ketones to give iso-benzofurans and hydroxymethylbenzophenones. With MeCOPh, cyclotetramerization occurs giving a substituted cyclohexene. This demonstrates new rare earth carbene reactivity which complements existing Wittig-type reactivity.