An original oxidative ring contraction of easily accessible cyclobutene derivatives for the selective formation of cyclopropylketones (CPKs) under atmospheric conditions is reported. Comprehensive mechanistic studies are proposed to support this novel, yet unusual, rearrangement. Insights into the mechanism ultimately led to simplification and generalization of the ring contraction of cyclobutenes using mCPBA as an oxidant. This unique and functional group tolerant transformation proceeds under mild conditions at room temperature, providing access to a new library of polyfunctionalized motifs. With CPKs being attractive and privileged pharmacophores, the elaboration of such a simple and straightforward strategy represents a highly valuable tool for drug discovery and medicinal chemistry. Additionally, the described method was employed to generate a pool of bioactive substances and key precursors in a minimum number of steps.