[Figure not available: see fulltext.] 1-Acyl-2-azabuta-1,3-dienes underwent rearrangement to 4-pyrrolin-2-ones in the presence of acidic catalysts (silica gel or ZnCl₂) and water. The reaction proceeded via the formation of 2,3-dihydroxy-3,4-dihydropyrrole and 2-hydroxy-2Н-pyrrole intermediates, the latter of which was transformed by [1,5]-sigmatropic shift of carbonyl substituent and prototropic isomerization. 4-Chloro-substituted 1-acetyl-2-azabuta-1,3-dienes were stable toward rearrangement, while brominated analogs rearranged into 4-pyrrolin-2-ones, probably as a result of the initial radical hydrodebromination. According to calculations performed at the DFT level, two steps of the reaction were catalyzed by acid: the cyclization of 2-azabutadiene and the sigmatropic shift in the 2-hydroxy-2Н-pyrrole intermediate.