A one-pot efficient synthetic approach for the rapid construction of spirocyclopenta[a]indene derivatives has been developed via an iodine-initiated cascade ring expansion and intramolecular Friedel-Crafts-type cyclization from propargyl alcohol-tethered alkylidenecyclobutanes under mild conditions with broad substrate scope. This cascade process can be elegantly conducted on a gram scale. A plausible reaction mechanism has been proposed on the basis of a series of deuterium labeling and control experiments.