The fused cyclic N-acyliminium ion generated during the imide carbonyl activation reaction of phenethylphthalimide was confirmed by single crystal X-ray diffraction. The Lewis acid assisted imide carbonyl activation methodology was successfully extended to synthesize fused tetrahydro-β-carboline units from the corresponding N-indolylethylimides. Lewis acid, BBr3, facilitates efficiently the intramolecular cyclization of N-indolylethylimides to fused cyclic N-acyliminium ion intermediate, which on reduction using NaBH4 delivered fused tetrahydro-β-carboline scaffolds. With the help of single crystal X-ray structural analysis the involvement of fused cyclic N-acyliminium ion intermediate in the cyclization process of phenethylimide is established.