The design, synthesis and evaluation of a series of 1,2,4‐thiadiazolidinones with potential muscarinic receptor binding properties has been performed. During the synthesis of the target compounds, we observed an interesting reductive cleavage of the thiadiazolidinone system which leads to the formation of the novel piperidine spiro triazine heterocycle. The synthesis, structural elucidation (NMR spectroscopy and X‐ray diffraction) and biological evaluation of the new compounds are described. With the structures unequivocally established, a mechanism for the formation of the spiro compound is proposed.