A domino synthesis of α-hydroxy ketones has been developed from benzylic secondary alcohols employing catalytic iodonium ions stabilized by DMSO. The reaction proceeds through an unprecedented sequential oxidation of alcohols to ketone and its α-hydroxylation in a controlled manner. The spectroscopic evidence establishes the possibility of formation of a stable halogen-bonded adduct between DMSO and iodonium ions. © 2017 The Royal Society of Chemistry.