Catalytic hydrogenation of (2-nitrophenyl) acetonitriles bearing an electron-withdrawing substituent α to the nitrile, using Pd/C and (Ph3P) 4Pd, affords N-hydroxy-2-aminoindoles in good to excellent yields.(Ph3P) 4Pd decreases the reduction rate of the intermediate hydroxylamine and acts as a catalyst during the cyclization onto the nitrile.