Molecular iodine (10 mol%) efficiently catalyzes the ring expansion of 4-oxoazetidine-2-carbA C H T U N G T R E N N U N G aldehydes in the presence of tert-butyldimethylsilyl cyanide, or allylic and propargylic trimethylsilanes to afford protected 5-functionalized-3,4-dihydroxypyrrolidin-2-ones with good yield and high diastereoselectivity, through a C3 À C4 bond cleavage of the b-lactam nucleus. Interestingly, in contrast to the iodine-catalyzed reactions of 3-alkoxy-b-lactam aldehydes which lead to the corresponding g-lactam derivatives (rearrangement adducts), the reactions of 3-aryloxy-b-lactam aldehydes under similar conditions gave b-lactam-fused chromanes (cyclization adducts) as the sole products, through exclusive electrophilic aromatic substitution involving the C3 aromatic ring and the carbaldehyde. In order to support the mechanistic proposals, theoretical studies have been performed.