The release of azomethine ylide reactivity from oxazolidinones such as 4a/4b and 7 is proposed to involve a stepwise fragmentation via12 and 13 followed by cycloaddition (to an alkene) leading to adduct 14, which then undergoes decarboxylation under the reaction conditions to give the observed product 15. In the case of CC-based dipolarophiles, the cycloaddition is concerted and stereospecific, and the cycloaddition step is rate determining. Extensive experimental, together with computational data, including racemisation and kinetic studies, as well as the changes in reactivity associated with varying key structural features associated with the β-lactam based oxazolidinones is presented in support of the favoured mechanistic postulate. The fragmentation–cycloaddition–decarboxylation sequence is an alternative pathway for the release of an azomethine ylide from an oxazolidinone to that process already well established for N-alkyl oxazolidinones (concerted decarboxylation before cycloaddition). The N-acyl component associated with 4 may influence this change in mechanism, but specific structural features associated with the β-lactam system (ring strain and the presence of a malonyl moiety) are most likely responsible for the mechanistic divergence that is observed.