New convenient and economical synthesis of 5,6-dihydro-2-methyl-1,4-oxathiin-3-carboxanilide 1 and the plausible reaction mechanism were described. Reaction of ${alpha}$-chloroacetoacetanilide 4 (1 molar equivalent) with 2-mercaptoethanol (1.2 molar equivalent) in the presence of p-toluenesulfonic acid monohydrate (0.05 molar equivalent) as a catalyst in refluxing toluene with water trap yielded carboxin 1. The proposed mechanism is that ${alpha}$-chloro 1,3-oxathiolane 8 which is a heuithioketal of 4 was converted to unisolable sulfonium ion 9 through neighboring group participation of sulfur followed by rearrangement to more stable oxonium ion 12 and then release acidic proton to produce the carboxin 1.