A novel and mild Rh(III)-catalyzed [5 + 2] oxidative annulation between cyclic arylguanidines and alkynes efficiently affords 1,3-benzodiazepines (pentacyclic guanidines). The use of O2 as the sole oxidant in place of commonly used metal oxidants such as AgOAc clearly improves the efficiency of the oxidative annulation process. The mechanism of the cycloaddition most likely involves the formation of an eight-membered rhodacycle. DFT calculations support a striking mechanistic proposal for the [5 + 2] oxidative annulation.