Abstract A tunable rhodium‐catalyzed intramolecular alkyne insertion reaction proceeding through the CC cleavage of benzocyclobutenones is described. Selective formation of either the direct or decarbonylative insertion product can be controlled by using different catalytic systems. A variety of fused β‐naphthol and indene scaffolds were obtained in good yields with high functional group tolerance. This work illustrates a divergent approach to synthesize fused‐ring systems by CC activation/functionalization.