The cycloaddition reactions between isatin azomethine imine and in situ generated azaoxyallyl cation were explored by density functional theory calculations to elucidate the competition among different pathways. The [3+2] cycloaddition between azaoxyallyl cation and carbonyl group could proceed via either the N‐alkylated pathway or O‐alkylated pathway, which finally afforded the 4‐oxazolidinone or imidate skeleton, respectively. The exclusive formation of the 4‐oxazolidinone product should result from the higher stability and feasible conversion. The possibly competing [3+3] reaction between azaoxyallyl cation and azomethine imine was predicted to be less favorable kinetically than the [3+2] one. Lastly, charge and orbital analyses were performed on isatin azomethine imine to explain the observed reactivities.