Reaction of an in situ generated phosphinidene complex [PhPW(CO)(5)] with the aromatic azulene and guaiazulene leads to unexpected 1,4-adducts of the seven-membered ring and to C--H bond insertion of the five-membered ring. A DFT analysis suggests that the reaction is initiated by formation of a eta(1)-complex between the phosphinidene and the five-membered ring of the aromatic substrate. Four conformations of this complex were identified. Two convert without barrier to the slightly more stable syn- and anti-1,2-adducts. These undergo pericyclic 1,7-sigmatropic rearrangements with remarkably low barriers to give 1,4-adducts, with an inverted configuration at the phosphorus center. An X-ray crystal structure is presented for one of the 1,4-adducts of guaiazulene. The other two eta(1)-complexes insert with modest barriers into a C--H bond of the five-membered ring.