N-Alkyl α-diazo-γ-butyrolactams, previously found to be unstable and to undergo unproductive dimerization to bishydrazones, were successfully converted immediately to various X–H insertion products with alcohols, aromatic amines and thiols via an in situ Rh^II-catalyzed reaction. With aliphatic amines or unreactive, sterically hindered anilines, the reactions tended to yield enamine adducts.