Stepwise coupling of N-Boc-protected beta-aminoethanols or beta-mercaptoethylamines with various alpha-diazoacetates provides a new, unified approach to constructing (thio)morpholin-3-ones. The process involves a Rh-2(esp)(2)-catalyzed X-H insertion reaction, Boc group removal and ambient-temperature lactamization and is conveniently conducted in one-pot format.