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A simple and efficient method was developed for the construction of the medicinally important 3-substituted-3-hydroxyoxindole and its 3-spirocyclic derivatives with readily available aniline derivatives as starting materials. This highly atom- and step-economical one-pot protocol was carried out under metal-free base-mediated conditions through a novel oxidative annulation strategy with oxygen as the oxidant. The key intermediates were isolated and confirmed. A reasonable reaction pathway was proposed and supported by the preliminary experiments, and the computational studies were carried out to understand the energetics of the key rearrangement reaction. [ABSTRACT FROM AUTHOR]