The electronic structure of the 2.4-diphosphacyclobutanediyl-1.3 and its substituted compounds were investigated by various electron-correlated quantum chemical ab initio calculations, at the MCSCF, MP2, and MR-MP2 levels, and compared with the results of RHF level calculations. The structure is in essence a biradical (biradicaloid) species with partial pi -delocalization within the ring system. A problem occurs with the description of this species by the MCSCF approach. A limited active configuration space overestimates the biradical nature of the structure. A satisfactory description is given by the MP2 procedure which also takes proper account for the dynamical part of the correlation energy correction to the resulting wave function. A bicyclic structure is more stable than a ring structure. A phosphino-carbene analogous structure is only slightly less stable than the ring structure. A detailed study of the substituent effects indicates that silyl groups at carbon tend to increase considerably the stability of a singlet ground state over a triplet ground state. Bonding within the ring system is discussed in terms of biradical or cyclic delocalized canonical structures.