An efficient one-pot trifluoroacetic acid catalyzed thiophenylmethylation and thioalkylmethylation of lactams, isatins and phenols via domino three-component coupling (3CC) with thiols and formaldehyde in water has been described. The developed protocol has wide substrate-scope for a variety of thiols, lactams and isatins. Utility of the protocol for ortho-/para- thiophenylmethylation of phenols indicated that reaction proceeds through in situ formation of a thiophenylmethylium cation intermediate. LC-ESIMS-based mechanistic investigation further confirmed formation of this intermediate. For isatins, the N- versus O-thiophenylmethylation was confirmed by recording the X-ray crystal structure of compound 4e. Thionaphthyl analog 3e exhibited significant antiproliferative activity in MCF-7 cells (IC50 8 μM) via apoptosis-induction.