We report herein a zinc-catalyzed β-allylation of cyclopropanols with Morita–Baylis–Hillman (MBH) carbonates with retention of the cyclopropane ring. The reaction is promoted by a zinc aminoalkoxide catalyst generated from Et2Zn and a β-aminoalcohol, affording cyclopropyl-fused α-alkylidene-δ-valerolactone derivatives in moderate to good yields. A bicyclic 1,2-disubstituted cyclopropanols undergoes allylation at the sterically more hindered β-position. This observation, together with other mechanistic experiments, suggest that the present reaction does not proceed via direct β-C–H cleavage of the cyclopropanol, but rather involves zinc homoenolate and its enolization to generate a key bis- nucleophilic species. α-Allylation of this “enolized homoenolate” with MBH carbonate would be followed by regeneration of the cyclopropane ring and irreversible lactonization. A sequence of the present reaction and known cyclopropanol transformation provides an opportunity to transform a simple cyclopropanol into α,β- or β,β-difunctionalized ketones.