Indium(III) halides catalyze the hydroalkoxylation reaction of ortho-alkynylphenols to aff ord benzo[b]furans in good yields. The reaction proceeds with 5-endo-dig regioselectivity with a variety of phenols functionalized at the arene and alkyne moieties in high yields using InI3 (5 mol%) in DCE. Experimental and computational studies support a mechanism based on the indium(III) p-Lewis acid activation of the alkyne followed by nucleophilic addition of the phenol and final protodemetalation to afford the corresponding benzo[b]furan. DFT calculations suggest that dimer In2I6 is the catalytic species through a novel double coordination with the alkyne and the hydroxyl group.