The treatment of 3-acyl-4-hydroxy-1H-quinolin-2-ones (1) with ethyl (triphenylphosphoranylidene)acetate leads to 5,6-dihydro-2H-pyrano[3,2-c]quinoline-2,5-diones (2), which were brominated to 3-bromo derivatives (4). Alkaline hydrolysis of 4 gives 2-alkyl/aryl-4-oxo-4,5-dihydrofuro[3,2-c]quinoline-3-carboxylic acids (6), which were decarboxylated to 2-alkyl/aryl-5H-furo[3,2-c]quinolin-4-ones (8). The reaction of 3-acetyl-4-hydroxy-1-methyl-1H-quinolin-2-one (la) with ethyl (triphenylphosphoranylidene)chloroacetate proceeds not only at the acetyl but also at the amide group to give a mixture of ethyl 3,5-dimethyl-4-oxo-4,5-dihydrofuro[3,2-c]quinoline-2-carboxylate (11a) and ethyl 4,6-dimethyl-2-oxo-5,6-dihydro-2H-pyrano[3,2-c]quinolin-5-ylidene-(chloro)acetate (12a). The reaction mechanism of the molecular rearrangement of 4 to 6 is discussed.