The 1,3-dipolar cycloaddition of bis(phenylazo)stilbene with activated ethene and ethyne derivatives and the subsequent rearrangement of the cycloadducts have been studied using model compounds at the B3LYP/6-31G(d) level of density functional theory (DFT). From the structural and electronic features, a five-membered zwitterionic ring system 9 (1,2,3-triazolium-1-imide system) formed from bis(phenylazo)ethylene is confirmed as the active 1,3-dipole species in the reaction. Formation of the 1,3-dipolar cycloadduct from the alkyne derivative is found to be 26.0 kcal/mol exergonic, and it requires an activation free energy of 19.4 kcal/mol. The 1,3-cycloadduct formed in the reaction undergoes a very facile migration of a nitrogen-bearing fragment, passing through a zwitterionic transition state. A small activation free energy of 8.2 kcal/mol is observed for this step of the reaction, and it is 19.6 kcal/mol exergonic. Further activation of the newly formed rearranged product is possible under elevated temperatures, again passing through a zwitterionic transition state and resulting in the formation of 2,5-dihydro-1,2,3-triazine derivatives. Such derivatives have been recently reported by Butler et al. (J. Org. Chem. 2006, 71, 5679). The charge separation in 9 and the zwitterionic transition states are stabilized through the pi-system of the phenyl rings and the carbonyl groups. Similar structural, electronic, and mechanistic features are obtained for the reaction of 9 with the ethylenic dipolarophile acrylonitrile. Molecular electrostatic potential analyses of the 1,3-dipole and the zwitterionic transitions states are found to be very useful for characterizing their electron delocalization features. The solvation effects can enhance the feasibility of these reactions as they stabilize the zwitterionic transition states to a great extent.