© 2019 Taylor & Francis Group, LLC.An efficient method for the preparation of 4-oxo-4,5,6,7-tetrahydroindoles was successfully applied to the synthesis of N-substituted 4-oxo-4,5,6,7-tetrahydroindoles (4) and (5) for the first time. Manganese(III) acetate-mediated acetoxylation of (2) produced 4,5,6,7-tetrahydro-4-oxo-7,7-dimethyl benzofuran-5-yl acetate (3) for the first time in the literature. Then 4,5,6,7-tetrahydro-4-oxo-7,7-dimethyl benzofuran-5-yl acetate was converted to its indole derivative (4) via benzyl amine. Thus, 1-benzyl-5-hydroxy-7,7-dimethyl-6,7-dihydro-1H-indol-4(5H)-one (4) was obtained in good yields. Furthermore, biotransformation of pharmacologically interesting compounds such as 5-hydroxy-7,7-dimethyl-6,7-dihydro-1H-indol-4-(5H)-one (5) were also obtained by biotransformation reaction using Aspergillus niger.