Recently, N-hydroxyindole derivatives have received much interest because of their unique structural motif and various biological activities. In this study, we report the first example of a Rh(III)-catalyzed reaction of arylnitrones with α-diazoketoesters or α-diazodiketones to produce N-hydroxyindole derivatives. Intriguingly, we could build the N-hydroxyindole scaffold by blocking the cleavage of the N-O bond selectively, while eliminating the acyl group of α-diazoketoesters or α-diazodiketones preferentially.