The first example of an aqueous, asymmetric, and CO gas-free Pauson-Khand-type reaction is described. Using formaldehyde as a commercially available substitute for carbon monoxide, combined use of a hydrophilic phosphine (TPPTS) and a hydrophobic, chiral phosphine (tolBINAP) enable the reaction to proceed smoothly in aqueous media, even in the absence of carbon monoxide, and stereoselectively. (C) 2004 Elsevier Ltd. All rights reserved.