The intramolecular carbene C–H insertion of α-diazo-α(methoxycarbonyl)acetamides leading to β-lactams is effectively catalyzed by palladiumcomplexes. It is found that whereas Pd(0)catalysts typically produce mixtures of β-lactams together with Buchner-type reaction products, the use of Pd(II)-catalysts results in highly chemoselective transformations. According to DFT calculations, this insertion reaction