The semi-empirical AM1 SCF-MO method is used to study the ring expansion of ortho-substituted phenylnitrenes in the singlet state. This two-step rearrangement involves nitrene atom insertion into the phenyl ring to give a bicyclic azepine intermediate, which undergoes electrocyclic ring opening to yield the monocyclic keteneimine product. The first step of nitrene insertion in ortho-substituted phenylnitrenes may occur either towards the substituent side or away from it, while the second step is simply sequential to the first. Nine ortho-substituted phenylnitrene systems X–C 6H 4–N (X=H, CH 3, CN, NH 2, NO 2, OH, F, SH and Cl) are considered for study here. Comparison of activation energy barriers for both steps predicts that the first step of azepine formation would be the rate-determining step. Electron-withdrawing substituents promote this step, and vice versa for electron-donating ones. The azepine intermediate is unstable compared to the keteneimine product due to strain. The transition state for the second step is predicted to have aromatic character, unlike the azepine and ketenimine. In general, the ring expansion is predicted to be favoured towards the unsubstituted side of the ring rather than towards the substituted side, where steric factors play the major role. The two successive steps of the ring expansion proceed via transition states which are more or less similar to each other, the second one having aromatic character. Competition between ring expansion and decay of the singlet phenylnitrene to the triplet state, as estimated by calculated enthalpy terms, is predicted to favour decay to the triplet state.