We have developed a Rh(III)-catalyzed diastereoselective [2+1] annulation onto allylic alcohols initiated by alkenyl C-H activation of N-enoxyphthalimides to furnish substituted cyclopropyl-ketones. Notably, the traceless oxyphthalimide handle serves three functions: directing C-H activation, oxidation of Rh(III), and, collectively with the allylic alcohol, in directing cyclopropanation to control diastereoselectivity. Allylic alcohols are shown to be highly reactive olefin coupling partners leading to a directed diastereoselective cyclopropanation reaction, providing products not accessible by other routes.