An iodine-promoted regioselective cyclization of N-propynyl/allyl amides with sulfonyl hydrazides has been developed for the synthesis of 5-methyl-arylsulfonyloxazoles and 5-methyl-arylthiooxazolines via sulfonylation and sulfenylation reactions. The notable features of this reaction are the formation of new C-S and C-O bonds, the broad functional group tolerance, and its applicability to alkyl sulfonyl hydrazides as well as internal alkynes.