The first examples of 3,3-diaryloxetanes are prepared in a lithium-catalyzed and substrate dependent divergent Friedel–Crafts reaction. para-Selective Friedel–Crafts reactions of phenols using oxetan-3-ols afford 3,3-diaryloxetanes by displacement of the hydroxy group. These constitute new isosteres for benzophenones and diarylmethanes. Conversely, ortho-selective Friedel–Crafts reactions of phenols afford 3-aryl-3-hydroxymethyl-dihydrobenzofurans by tandem alkylation–ring opening; the outcome of the reaction diverging to structurally distinct products dependent on the substrate regioselectivity. Further reactivity of the oxetane products is demonstrated, suitable for incorporation into drug discovery efforts.