A rhodium(III)-catalyzed oxidative cyclization of chalcones with internal alkynes is reported, generating biologically important 3,3-disubstituted 1-indanones along with reusable aromatic aldehydes. This transformation features unique (4+1) reaction mode, excellent regioselectivity in alkyne insertion, broad substrate scope, allows for the construction of quaternary carbon centers, and is scalable. Steric hindrance from substrate and ligand probably controls the chemoselectivity of this carbocyclization. Importantly, this discovery enables a practical two-step protocol switching the overall reaction of acetophenones with internal alkynes from a (3+2) to a (4+1) annulation.