An efficient method to prepare 1'H-spiro[indoline-3,3'-quinoline]-2',4'-diones and their trifluoromethylated products was developed via a palladium-catalyzed Sonogashira coupling/Wacker-type oxypalladation/cyclization cascade reaction. The amount of water in the reaction system played an important role in the in situ trifluoromethylation reaction, and the trifluoromethylation exhibited excellent molecular self-induced stereoselectivity.