The mechanism of the acid-catalyzed intramolecular Schmidt reaction of 2-azidopropylcyclohexanones was studied using density functional theory (primarily M06-2X). The reaction was found to proceed through rapid formation of azidohydrin intermediates followed by rate-determining concerted N(2)-loss/shift of the alkyl group antiperiplanar to the N(2) leaving group. For cases where steric, lone pair-cation, and cation-π effects have been invoked previously as regiocontrol elements, the origins and magnitudes of these effects have been examined theoretically.