The reaction of ortho-substituted nitrobenzenes with 3 mol vinylmagnesium halides gives mainly 7-substituted indoles together with minor amounts of the aniline from complete reduction of the nitroarene. Under the same experimental conditions, para-substituted nitrobenzenes essentially lead to the corresponding anilines, with indoles being recovered in very low yield. Nitrosoarenes react with 2 mol Grignard reagent to give almost the same product distribution. An accurate analysis of the stoichiometry of the reaction established that in the first stage of the reaction nitroarenes are attacked at the oxygen atoms and are reduced to nitrosoarenes via enolate elimination. The nitroso derivative can undergo a 1,2-addition to give an N-aryl-N-vinylhydroxylamino magnesium salt. Hydrolysis of this intermediate affords hydroxylamine and the carbonyl derivative corresponding to the vinyl Grignard reagent, as proved by the reaction of nitroarenes with 2 mol Grignard reagent. In the presence of an excess of vinyl magnesium halide, a complete reduction to vinylaniline derivatives, which hydrolyse to aniline, occurs. The effect of the bulkiness of the substituent both in the nitroarene and in the Grignard reagent, the orientation of alkylation and the relative reaction rates of indole and aniline formation suggest that indoles arise via a completely different route: i.e. an inverse 1,2-addition to the NO double bond. The N-aryl-O-vinylhydroxylamino magnesium salt intermediate can undergo a [3,3]-sigmatropic rearrangement followed by a rapid ring closure. The third mole of Grignard reagent acts as a base on this bicyclic intermediate, re-aromatizing the six-membered ring. Elimination of water ultimately leads to the indole.