A theoretical analysis of the silver-induced ring expansion of N-chloro-N-methyl-l-hydroxycyclopropylamine to form N-methyl-2-azetidinone, and of the Cl- elimination from this substrate without Ag+ assistance, was performed using the B3LYP method and the 6-31+G(d) basis set for C, N, O, H, and Cl atoms and the relativistic effective core pseudopotential LANL2DZ complemented with one set of f polarization functions (xi(f) = 0.473) for the Ag atom. The partial Ag+-assisted extrusion of Cl- at the rate-determining transition state provokes an important change in the nodal properties of the frontier molecular orbitals of the H3CCINCOHAg+ fragment, thus making very stabilizing HOMO-LUMO interactions between this fragment and the C2H4 moiety possible. This interaction leads to the ring opening and release of most of the strain energy, giving rise to a low energy barrier for the process. Also, by assisting the Cl- extrusion, Ag+ avoids the elimination of the hydroxyl hydrogen atom, which would provoke the fragmentation of the system instead of the formation of the beta-lactam.