The reaction of 2-(2-phenylethynyl)aniline with acetone in presence of [IrCp*Cl2]2 has previously been found to yield a vinyl indole derivative and not the indole expected to form following a hydroamination reaction. Experimental data, including labelling studies, isolation and solid state structure determination of a reaction intermediate together with DFT calculations were used to develop a mechanism for the formation of the vinyl indole. In the mechanism proposed, acetone plays a significant role in several steps of the reaction path, participating in the fragmentation of the dinuclear Ir complex and the formation of the reactive form of the catalyst as well as blocking the formation of the expected hydroamination product by coordination to the Ir catalyst. Coordinated acetone reacts with the aniline to form an imine derivative, which yields the final product following proton transfer promoted by acetone. The proposed mechanism is in good agreement with the experimental data.