An unprecedented and efficient three-component 1,3-dipolar cycloaddition reaction using (E)-2-(benzo[d]thiazol-2-yl)-3-(aryl)acrylonitriles 4a–g and an in situ generated azomethine ylide 3 from isatin and N-methylglycine is described. The reaction exhibits exclusive regioselectivity, resulting in the formation of 3′-(benzo[d]thiazol-2-yl)-1′-methyl-2-oxo-4′-(aryl)spiro[indoline-3,2′-pyrrolidine]-3′-carbonitriles regioisomers through exo/endo approaches. The diastereoselectivity of the reaction is highly dependent on the substitution pattern of the phenyl ring in dipolarophiles 4a–g, leading to the formation of exo-/endo-cycloadducts in varying ratios. To understand the stereoselectivity, the transition state structures were optimized using the TS guess geometry with the QST3-based method. The reaction mechanism and regioselectivity were elucidated by evaluating global and local electrophilicity and nucleophilicity descriptors at the B3LYP/cc-pVTZ level of theory, along with considerations based on the HSAB principle. The analysis of global electron density transfer (GEDT) showed that the reactions are polar and electron density fluxes from azomethine ylide 3 toward dipolarophile 4a–g. It was found from the molecular electrostatic potential map (MESP) that at the more favorable transition state, approach of reactants locates the oppositely charged regions over each other resulting in attractive forces between the two fragments. The computational results are consistent with the experimental observations, confirming that the reactions proceed through an asynchronous one-step mechanism.