A diastereoselective efficient synthesis of 5′H-spiro[indoline-3,2′-oxazol]-2-ones bearing a pharmacophore phthalimide fragment was developed. The approach is based on the thermal ring opening of spiro-aroyl-N-phthalimidoaziridine oxindoles, which are readily accessible via aminoaziridination of methylideneoxindoles. The formation of the final spiro compounds proceeds through the generation of azomethine ylides, followed by a selective 1,5-electrocyclization involving the aroyl carbonyl group and a formal 1,3-migration of the phthalimide substituent. The mechanism was confirmed by DFT calculations.