The N-2 liberation from iminodiazonium ion (2-X) is a key step of the Schmidt rearrangement of ketones. Molecular orbital calculations showed that two concurrent reaction channels, syn-benzyl fragmentation and anti-Me rearrangement, exist for syn-2, whereas anti-2-X proceeds via a single TS. Substituent effect analyses of the reactions of syn-2-X gave concave-upward plots, typical for a concurrent reaction mechanism. On the other hand, the reactions of anti-2-X gave linear Hammett plots, indicative of a single reaction mechanism for all anti-2-X. IRC calculations, however, revealed that the TS led to either an anti-benzyl rearrangement or an anti-benzyl fragmentation product depending on the substituent. Thus, the change of the mechanism (identity of the product) could not be detected by the Hammett plots. Ab initio dynamics simulations for anti-2-X were found to follow the IRC path for X = p-NO2, giving the rearrangement product, and almost so for X = p-MeO, giving the fragmentation products. However, in borderline cases where X is less donating than p-MeO and less withdrawing than p-NO2, the trajectories did not follow the minimum energy path on the potential energy surface but gave both rearrangement and fragmentation products directly from the single TS. This is a novel example of path bifurcation for a closed shell anionic reaction. It was concluded that a reactivity-selectivity argument based on the traditional IS theory might not always be applicable even to a well-known textbook organic reaction.