Thermolysis of oxadiazolines (5) in benzene at 110 degrees C leads to ketene acetals (11) as minor products. Carbonyl ylide intermediates (6), and oxiranes (7), presumably in equilibrium with those ylides, are implicated as unstable precursors of the ketene acetals although none of the oxiranes (carbonyl protected alpha-lactones) were isolable and only one of the ketene acetals was isolable in pure form. The evidence points to the two-step sequence of thermolysis of oxadiazolines, namely, initial cycloreversion to N-2 and carbonyl ylide (6), rather than concerted fragmentation to N-2, acetone, and carbene (12). The first-formed ylide does fragment to carbene and acetone in a second step that competes with oxirane formation. A tentative mechanism for reaction of 7 with 12, to afford 11, is advanced.