We report here a concise and regioselective synthesis of benzofulvene derivatives via an iodine(III)-mediated cyclization cascade of diynes. For 1,2-dialkynylbenzene substrates, the iodanylative cyclization is accompanied by triflation or fluorination, depending on the iodine(III) reagent, affording stereodefined benzofulvene derivatives. In contrast, the reaction of 1,6-diyne substrates is terminated by intramolecular Friedel–Crafts cyclization to deliver fused benzofulvene frameworks. A representative triyne was also shown to participate in an analogous cascade, furnishing functionalized cyclopenta[cd]indene derivatives. The resulting iodane-functionalized benzofulvenes serve as substrates for Pd-catalyzed cross-coupling and for aryne insertion, the latter being a transformation characteristic of hypervalent iodine chemistry.