Photoinduced tautomerization of 2-nitrobenzyl derivatives (1) gives rise to quinonoid intermediates (2), which may undergo further reactions competing with the retautomerization to 1. Rearrangements of 2 with different alpha substituents were studied with methods based on the density functional theory. The B3LYP functional with three different basis sets was used to optimize geometries of the minimum-energy and transition structures. The single-point energies were computed at these geometries by using the 6-311+G(2d,p) basis set in combination with four different hybrid functionals. Bulk solvent effects were estimated from the B3LYP/6-311 +G(2d,p) free energies computed at the gas-phase geometries with the self-consistent reaction field polarized continuum model method. A common reaction pathway for the E isomers of substituted 2 was identified as the exothermic cyclization leading to 2,1-benzoxazoline derivatives (3). The cyclization was predicted to be highly stereoselective, two distinct modes of the reaction were found for two stereoisomers differing in the position of the alpha substituent relative to the nitronic moiety. The activation barrier for the cyclization appeared to be reasonably well correlated with the electron-donating ability of the substituent that was characterized by the Hammett-type sigma(p)(+) constants. The effective barrier height for the tautomerization 2 --> 1 showed an opposite trend. The isomerization 2 --> 3 was predicted to compete efficiently with retautomerization for all compounds except for the parent compound and those with strong electron-withdrawing susbstituents. The cyclization of 2 in the gas phase and water was predicted to encounter a much smaller activation barrier than the analogous isomerization reaction of the deprotonated species (2(-)). Very high activation energies for the reaction 2(-) --> 3(-) were linked to profound structural changes predicted for deprotonation of 3. The computational results were discussed in respect to mechanism(s) of the photoinduced isomerization of 1 and to development of more efficient photolabile protecting groups.