The zwittazido cleavage reaction of the 4-azido-2-pyrrolinones is studied using the MP2/6-31G* and MP4SDQ/6-31G*//MP2/6-31G* levels of theory and taking into account the electrostatic effect of the solvent by means of a SCRF continuum model. Among the various reaction paths studied in this work, the most favored route for the thermolysis of 4-azido-2-pyrrolinone is shown to proceed through the expulsion of N-2 from the trans conformer of reactant. This N-2 elimination is the rate-determining step of the zwittazido process and leads to an azirine intermediate. The rearrangement of azirine to the zwitterionic intermediate may also proceed in a concerted manner no nitrene minimum being located on the MP2 PES. A reaction path through the formation of a triazole intermediate is not a competitive kinetic alternative to the N-2 elimination from 4-azido-2-pyrrolinone. Concerning the evolution of the zwitterionic intermediates, different competing pathways are investigated (electrocylic closure to beta-lactams, gauche-trans internal rotation, and fragmentation into cyanoketene and formaldimine). The solvent provides an important electrostatic stabilization of zwitterions increasing the energy barriers for the fragmentation. The electronic and steric roles of various substituents on the evolution of zwitterionic inermediates are examined through a set of calculations at the MP2/6-31G*HF//6-31G* SCRF level including mono-and multi-substituted structures. It is shown that the electron donor groups at C3 and C5 and alkyl groups at N1 in the pyrrolinone ring favor the electrocyclic closure to beta-lactams due to their torquoelectronic effect and steric hindrance, respectively, in a cooperative manner. Therefore, the effects of substituents and solvent are required to explain theoretically the experimental results by Moore et al. on the ring contraction of the 4-azido-2-pyrrolinones to the 3-cyano-2-azetidinones.