A concise synthetic approach to medicinally relevant pyrroloindolones and related fused heterocycles is reported via the diastereoselective N-addition of unprotected indoles to readily accessible cyclopropanone equivalents. The resulting stable hemiaminals are shown to smoothly rearrange to pyrroloindolones in mild conditions using Fe(III) catalysis in the presence of inexpensive ammonium persulfate as a stoichiometric oxidant. Experimental evidence points toward the formation of a β-carboxylic radical intermediate prone to cyclization and oxidative rearomatization as the operative mechanistic pathway.