1,1-Di(alkoxycarbonyl)-4-cyclopentyl-2-azabuta-1,3-dienes react with DBU to form two types of heterocyclic products: 1H-cyclopenta[c]pyrid-1-ones and 3-hydroxy-1H-pyrroles. These previously unobserved transformations proceed through the formation of 1-azapentadienyl anion which undergoes 1,6-shift of the alkoxycarbonyl group to the cyclopentyl moiety followed by 1,6-cyclization to form the cyclopentapyridone (path a) and 1,5-cyclization accompanied by 1,3-shift of the methoxy group followed by dialkyl carbonate elimination to afford the hydroxypyrrole (path b). The mechanisms of the reactions were studied using DFT calculations. Pyridones can be synthesized in one pot in three steps via Rh(II)-catalyzed isomerization of 4-cyclopentylisoxazoles to 2H-azirines and their subsequent reaction with diazomalonic esters, followed by heating of the resulting 2-azabuta-1,3-dienes with DBU.