The present communication describes the formation of a spiro-oxirane-oxindole from dirhodium tetraacetate (Rh₂(OAc)₄)-catalyzed reaction of isatin with ethyl diazoacetate by 1,3-cyclization of  the carbonyl ylide, formed from the reaction of rhodium carbenoid with C-3 carbonyl group of  isatin. The study also demonstrates the high reactivity of α-carboethoxycarbene to C-3 carbonyl functional group in comparison to amide carbonyl group of isatin.