The intramolecular carbene C-H insertion of α‐diazo‐α‐(methoxycarbonyl)acetamides leading to β‐lactams is effectively catalyzed by palladium complexes. It is found that although Pd0 catalysts typically produce mixtures of β‐lactams together with Buchner‐type reaction products, the use of PdII catalysts results in highly chemoselective transformations. According to DFT calculations, this insertion reaction occurs stepwise and involves an unprecedented PdII‐promoted Mannich‐type reaction through a metallacarbene‐induced zwitterionic intermediate
