The base-induced propargylation of the dye indigo results in the rapid and unprecedented one-pot synthesis of highly functionalized representatives of the pyrazino[1,2-a:4,3-a′]diindole, pyrido[1,2-a:3,4-b′]diindole and benzo[b]indolo[1,2-h]naphthyridine heterocyclic systems, with the last two reflecting the core skeleton of the anticancer/antiplasmodial marine natural products fascaplysin and homofascaplysins and a ring B-homologue, respectively. The polycyclic compounds 6–8, whose structures were confirmed through single-crystal X-ray crystallographic analysis, arise from sequential inter/intramolecular substitution–addition reactions, and in some cases, ring rearrangement reactions. Preliminary studies on controlling the reaction path selectivity, and the potential reaction mechanisms, are also described. Initial biological activity studies with these new heterocyclic derivatives indicated promising in vitro antiplasmodial activity as well as good anticancer activity. The chemistry described is new for the indigo moiety and cascade reactions from this readily available and cheap starting material should be more broadly applicable in the synthesis of additional new heterocyclic systems difficult to access by other means.