The energies and lifetimes of the excited states (S, S, S, T) of a diazotetrahydrofuranone were determined using experimental and computational methods. It was shown that direction of the diazoketone photochemical transformations without elimination of nitrogen is determined by multiplicity and energy of the excited state, generated by UV irradiation of diazo compound: isomerization to α-ketodiazirine proceeds from the singlet S state, whereas the alternative process of C-H insertion with hydrazone formation occurs through the triplet T state. The most probable excited state that leads to elimination of nitrogen and Wolff rearrangement is one of the highest singlet excited states of diazotetrahydrofuranone.