A copper-catalyzed three-component reaction of alkenes, alkylnitriles, and water affords gamma-butyrolactones in good yields. The domino process involves an unprecedented hydroxy-cyanoalkylation of alkenes and subsequent lactonization with the creation of three chemical bonds and a quaternary carbon center. The synthetic potential of this novel [2+2+1] heteroannulation reaction was illustrated by a concise total synthesis of ( )-sacidumlignan D.