The unique reactivity of in situ generated propargylic para-quinone methides as a new type of five-carbon synthon has been discovered by a novel bismuth(III)-catalyzed tandem annulation reaction. This 1,8-addition/cyclization/rearrangement cyclization cascade reaction is characterized by unusual structural reconstruction of 2-vinylphenol, involving cleavage of the C1'═C2' bond and formation of four new bonds. This method provides a convenient and mild approach to generate synthetically important functionalized indeno[2,1-c]chromenes. The mechanism of the reaction is proposed from several control experiments.