In this article we describe a new asymmetric synthesis of highly substituted tetrahydrofurans through a Pd(PPh3)4-catalyzed formal [3 + 2]-cycloaddition of donor-acceptor cyclopropanes and ketenes. The desired structural motif was formed in moderate to excellent yields (42-84% for 16 examples), with excellent Z:E isomer diastereoselectivity (≥19:1 for 16 examples), and with good to excellent enantioselectivity in all cases examined (83-97% ee for 6 examples). The synthetic utility of the products was illustrated by a number of diastereoselective transformations into reduced tetrahydrofurans and spirocyclic tetrahydrofuran-barbiturate derivatives.