A new mechanistic pathway of propargylic alcohol activation by gold(I) catalysis has been proposed toward the efficient synthesis of N-protected pyrroles, 5,6-dihydropyridin-3(4H)-ones from N-protected 5-aminopent-2-yn-1-ol, and 5-aminopent-2-yn-1-ol. Control experiments support that the reaction proceeded via the neighboring group participation of the oxygen atom of propargylic alcohol to form an allene oxide intermediate where the nucleophilic heteroatom attacks intramolecularly. Further, this methodology is successfully extrapolated toward the atom-economic synthesis of hydroxyalkyl indoles and benzofurans. The short reaction time of 30 s, low catalyst loading of 0.5 mol %, high yield, variation in the substrate scope, and procedurally simple open-flask reaction conditions make this methodology highly applied.