In the presence of an iridium catalyst bearing DTBM-SEGPHOS as a ligand and tert-butylethylene as a hydrogen scavenger, 2-ethyl-N-methylanilines were converted directly to 3-methylindoles in high yields. The reaction proceeded efficiently in mesitylene at 150 °C through transfer dehydrogenation of the ethyl group and following intramolecular dehydrogenative C-H/C-H coupling of the N-methyl group with the vinyl group formed in situ. The iridium catalyst system was applied to the asymmetric conversion affording enantioenriched indolines bearing a quaternary stereogenic carbon center at the C3 position.