A new approach for the synthetically important γ-functionalized enals has been developed. The strategy involves rhodium-catalyzed direct C-C & C-S bond forming site-selective γ-difunctionalization of diazoenals with aryl propargyl sulfides via sulfur ylide [2,3] sigmatropic rearrangement, resulting in the highly functionalized γ-allenyl(sulfanyl)enals in excellent yield at ambient temperature. This highly versatile approach constitutes a viable alternative to the remote carbonyl-directed γ-functionalization of unmodified enals which suffer from competitive side reactions. The synthetic utility of the γ-allenyl(sulfanyl)enals was demonstrated by the InCl3-catalyzed cycloisomerization to the trisubstituted furanyl-enals via an unusual 1,4-sulfanyl migration. In addition, an operationally simple and efficient one-pot [3+2] annulation of diazoenals and propargyl sulfides, involving combined γ-difunctionalization and cycloisomerization was successfully developed for the diverse enal-functionalized furans.