Minimum-energy reaction paths and potential-energy profiles of the ground state and excited singlet states of malonaldehyde have been investigated using the ab initio CASSCF and CASPT2 methods. Hydrogen transfer (or proton transfer) as well as detachment of the hydrogen atom are considered as reaction coordinates. For the S-1 (n pi*) state, a proton-transfer barrier of about 3000 cm(-1) is predicted, which is significantly larger than the barrier in the ground state (1100 cm(-1)). The hydrogen bond in the S-1 (n pi*) state is found to be weaker than the H-bond in the ground state. For the S-2 (pi pi*) state, on the other hand, an unusually strong H-bond and a barrierless potential-energy profile with respect to the proton-transfer coordinate are obtained. The single-minimum character of the S-2 (pi pi*) potential-energy surface is definitively established via the calculation of the Hessian. The calculated normal modes and the vibrational spectrum of the S-2 (pi pi*) State exhibit strong mixing of the OH stretch motion with CC and CO ring-stretching and ring-bending motions, reflecting pronounced bond conjugation within the H-chelate ring. Hitherto unknown (1)pi sigma* and (1)n sigma* states have been identified which are strongly repulsive with respect to in-plane detachment of the mobile hydrogen atom, leading to low-lying conical intersections with the electronic ground state. Vibronic coupling of the (1)pi pi* with the (1)pi sigma* state by out-of-plane modes connects the former, via a low barrier, to the conical intersection of the latter state with the ground state, providing a mechanism for efficient internal conversion. It is argued that these findings reflect general properties of the H chelate ring in intramolecularly hydrogen-bonded molecules and can provide the explanation of the photostability of these systems.