Phosphorus centered biradicaloids of the type [P(μ‐NTer)]2 [R = Ter = terphenyl = 2,6‐bis(2,4,6‐trimethylphenyl)phenyl, Hyp = tris(trimethylsilyl)silyl] were treated with covalent (R‐N3) and ionic azides (AgN3 and Hg(N3)2). While the reaction with the ionic azides led exclusively to the formation of diazides, [N3P(μ‐NTer)]2, triaza‐diphospha‐pentadienes, RN=P–N(R')–P=NR, were observed in the reaction with covalent azides featuring a Staudinger type reaction followed by PN bond rearrangement reactions. This new Staudinger type mechanism as well as the structure, bonding and thermodynamics along different reaction paths are discussed based on DFT computations.