C-O bond formation in reactions of olefins with oxygen is a long standing challenge in chemistry for which the very complicated-sometimes controversial-mechanistic panorama slows down the design of catalysts for oxygenations. In this regard, the mechanistic details of the oxidation of the complex [Rh(cod)(Ph N )] (1) (cod=1,5-cyclooctadiene) with oxygen to the unique 2-rhodaoxetane compound [{Rh(OC H )(Ph N )} ] (2) has been investigated by DFT calculations. The results of this study provide evidences for a novel bimetallic mechanism in which two rhodium atoms redistribute the four electrons involved in the cleavage of the O=O bond. Furthermore, both oxygen atoms are used to create two new C-O bonds in a controlled fashion with 100 % atom economy. The key intermediates that we have found in this process are a mononuclear open-shell triplet superoxo compound, an open-shell singlet "μ-(peroxo)" derivative, and a closed-shell singlet "bis(μ-oxo)" complex. Some of the findings are used to predict the reactions of Rh complexes with oxygen, exemplified by that of the complex [Rh(cod)(OnapyMe )] (3). Starting from 3, [{Rh(OC H )(OnapyMe )} ] (4) has been prepared and characterized, which represents the second example of a 2-rhodaoxetane compound coming from an oxygenation reaction with oxygen.