A new method for cyclopropanation of olefins with the BuLi—AlCl3—CH2I2 reagent system was developed. The reaction is tolerant of a wide range of unsaturated alkyl- and aryl-substituted hydrocarbons of linear and cyclic structure (octene-1, decene-1, tetradecene-1, styrene, 1-vinylnaphthalene, cyclohexene, cyclooctene, myrcene) and gives high yields (63–87%) of the corresponding cyclopropanation products. The reactions involving the sterically hindered olefins (2-cyclobutylideneadamantane, 2,2′-bi(adamantylidene)) produce cyclopropane-containing polycyclic hydrocarbons in 40–45% yields.