The rhodium-catalyzed reaction of racemic allyl alcohols with methyl phenyldiazoacetate or methyl styryldiazoacetate results in a two-step process, an initial oxonium ylide formation followed by a [2,3]-sigmatropic rearrangement. This process competes favorably with the more conventional O-H insertion chemistry as long as donor/acceptor carbenoids and highly substituted allyl alcohols are used as substrates. When the reactions are catalyzed by Rh-2(S-DOSP)(4), tertiary alpha-hydroxycarboxylate derivatives with two adjacent quaternary centers are produced with high enantioselectivity (85-98% ee).