A one-pot C鈥揌 insertion/olefination sequence for the conversion of 伪-diazo-伪-(dialkoxyphosphoryl)acetates into 伪-alkylidene-纬-butyrolactones is reported. The key C鈥揌 insertion process is achieved using a catalytic amount of a dirhodium carboxylate catalyst, using operationally simple conditions. The size and electronic properties of the attached substituents were found to influence the regio- and diastereoselectivity of the process. The utility of the process is demonstrated by the synthesis of a known Staphylococcus aureus (MRSA) virulence inhibitor.