An approach to a new type of diazo reagents─diazo dihydrouracils─has been developed, and various transformations of the obtained diazo heterocycles have been studied, demonstrating their high synthetic potential for obtaining structurally diverse derivatives based on the privileged dihydrouracil scaffold. The X-H insertion reactions provide high yields of a variety of 5-substituted dihydrouracils. Cyclopropanation and 1,3-dipolar cycloaddition reactions involving a carbonyl ylide intermediate have been carried out to give spiro-annulated derivatives. The limitations of the modification methods with respect to the nature of substituents on the nitrogen atoms of the diazo heterocycle have been outlined. © 2024 American Chemical Society.