A concise method for the diastereoselective synthesis of octahydroindoles is presented. The products contain 2-amido and 7-hydroxyl substituents. A series of 2-acyl-5-aminooxazoles were prepared in one step. Upon methylation of the oxazole nitrogen atom, the substrates underwent rapid intramolecular 1,3-dipolar cycloaddition with a tethered alkene and, after reduction with excess hydride, produced octahydroindoles with excellent diastereoselectivity. The method allows for the installation of α-quaternary stereogenic carbon atoms.