The Rh(II)-carbene reaction is dramatically affected by the neighboring substituents. If the neighboring substituent is an OH group, a1,2-H shift is the exclusive pathway. If it is an OAc group, a 1,2-acetoxy migration is observed. If it is p-toluenesulfonyl group, 1,3 and 1,5-C-H insertion are the major pathways, and the 1,2-H shift is completely suppressed. If the adjacent substituent is a trichloroacetyl amino group, 1,5-C-H insertion competes with the 1,2-hydride shift, and no 1,3-C-H insertion can be observed. Both electronic and steric factors are responsible for the switching of the Rh(II)-carbene reaction pathway. The highly stereoselective 1,5-C-H insertions in Rh(II)-catalyzed reaction of alpha-diazocarbonyl compounds, bearing beta-trichloroacetylamino substituent, can be utilized as a novel way to synthesize five-membered cyclic beta-amino acid derivatives.