Transition-metal-catalyzed, strain-release-driven transformations of "spring-loaded" bicyclo[1.1.0]butanes (BCBs) are considered potent tools in synthetic organic chemistry. Previously proposed strain-release mechanisms involve either the insertion of the central C-C bond of BCBs into a metal-carbon bond, followed by β-C elimination, or the oxidative addition of the central or lateral C-C bond on the transition metal center, followed by reductive elimination. This study, employing DFT calculations on a Rh(III)-catalyzed model system in a three-component protocol involving oxime ether, BCB ester, and ethyl glyoxylate for constructing diastereoselective quaternary carbon centers, introduces an unusual strain-release mechanism for BCBs. In this mechanism, the catalytic reaction is initiated by the simultaneous cleavage of two C-C bonds (the central and lateral C-C bonds), resulting in the formation of a Rh-carbene intermediate. The new mechanism exhibits a barrier of 21.0 kcal/mol, making it energetically more favorable by 11.1 kcal/mol compared to the previously suggested most favorable pathway. This unusual reaction mode rationalizes experimental observation of the construction of quaternary carbon centers, including the excellent E-selectivity and diastereoselectivity. The newly proposed strain-release mechanism holds promise in advancing our understanding of transition-metal-catalyzed C-C bond activation mechanisms and facilitating the synthesis of transition metal carbene complexes.