A one-pot C-H insertion/olefination sequence for the conversion of alpha-diazo-alpha-(dialkoxyphosphoryl)acetates into alpha-alkylidene-gamma-butyrolactones is reported. The key C-H 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.