The scope of the Schmidt rearrangement of ketones has been extended to dialkyl acylphosphonates (11a-111). Surprisingly, it was found that 11a-11d and 11g, in which the acyl moiety was benzoyl alone or benzoyl bearing an electron-attracting or mildly electron-releasing substituent, yielded an overwhelming portion of products resulting from C-to-N migration of the aryl group (N-arylcarbamoylphosphonates, 12, and N-arylformamides, 15). Contrariwise, the arenecarbonylphosphonates, which carry a powerful electron-releasing p-alkoxy group, yielded products resulting from phosphonate group migration from C to N or elimination (dialkyl N-arenecarbonylphosphoramidates, 13, and arenecarbonitriles, 17, respectively). These counterintuitive results are rationalized by application of the concept of "degree of electron demand" to this area of intramolecular rearrangements. The possible existence of an additional pathway for the Schmidt rearrangement, involving protonation of the iminodiazonium ion, is proposed.