Kinetics and mechanisms of the reactions of the β-dicarbonyl-substituted iodonium ylides 1(a–d) with several π-conjugated carbenium and iminium ions have been investigated. All reactions proceed with rate-determining attack of the electrophile at the nucleophilic carbon center of the ylides to give iodonium ions, which rapidly expel iodobenzene and undergo different subsequent reactions. The second-order rate constants k₂ for the reactions of the iodonium ylides with benzhydrylium ions correlate linearly with the electrophilicity parameters E of the benzhydrylium ions and thus follow the linear free energy relationship log k(20 °C) = s_N(N + E) (eq 1), where electrophiles are characterized by one parameter (E), while nucleophiles are characterized by two parameters: the nucleophilicity N and the susceptibility s_N. The nucleophilicity parameters 4 < N < 8 for iodonium ylides 1(a–d) derived from these correlations show that substituting hydrogen for Ph-I⁺ at the carbanionic center of Meldrum’s acid or dimedone, respectively, reduces the nucleophilicity by approximately 10 orders of magnitude. The iodonium ylides 1(a–d) thus have nucleophilicities similar to those of pyrroles, indoles, and silylated enol ethers and, therefore, should be suitable substrates in iminium-activated reactions. Good agreement of the measured rate constant for the cyclopropanation of the imidazolidinone-derived iminium ion 10a with the iodonium ylide 1a with the rate constant calculated by eq 1 suggests a stepwise mechanism in which the initial nucleophilic attack of the iodonium ylide at the iminium ion is rate-determining. The reaction of cinnamaldehyde with iodonium ylide 1a catalyzed by (5S)-5-benzyl-2,2,3-trimethyl-imidazolidin-4-one (11a, MacMillan’s first-generation catalyst) gives the corresponding cyclopropane with an enantiomeric ratio of 70/30 and, thus, provides proof of principle that iodonium ylides are suitable substrates for iminium-activated cyclopropanations.