Herein, we have developed a strategy of Rh(III)-catalyzed C–H activation of N-nitrosoanilines and iodonium ylides to construct novel tetralydrocarbzol-4-one scaffolds, which provided valuable templates for sequential C-H functionalization such as alkylation, alkenyla-tion, amidation and (hetero)arylation at C5-position of tetralydrocarbzol-4-one with different coupling partners. Gram-scale synthesis and further transformation of tetralydrocarbzol-4-one derivatives to Ondansetron and its analogues demonstrated the utility of this protocol, which enabled the concise and diverse construction of biologically active molecules.