A novel three-component reaction of N-hydroxyanilines, enynones, and diazo compounds has been developed via a metal-organo relay catalysis, providing highly functionalized β-lactams containing two quaternary carbon centers in good yields and with excellent diastereoselectivities. This protocol features a sequential reaction of Rh-catalyzed imine formation, Wolff rearrangement, and benzoylquinine-catalyzed Staudinger cyclization using the stable, benign, and readily available N-hydroxyanilines as the N-resources.