An ylide-based aza-Payne rearrangement of 2,3-aziridin-1-ols leads to an efficient process for the preparation of pyrrolidines. The aza-Payne rearrangement under basic reaction conditions favors the formation of epoxy amines. Subsequent nucleophilic attack of the epoxide by the ylide yields a bis-anion, which upon a 5-exo-tet ring-closure yields the desired pyrrolidine, thus completing the relay of the three-membered to the five-membered nitrogen-containing ring system. This process takes place with complete transfer of stereochemical fidelity and can be applied to sterically hindered aziridinols.