Theoretical research on the keto-enol tautomerization of 2-(2-Hydroxyphenyl)-1-aza azulene (2HPhAZ) and its thiol-thione (2MPhAZ) analouge has been performed using the density functional B3LYP method with the 6–311 + + G(2d,2p) basis set in gas and ethanol phases. The findings of the MO computation on the energy scale and the prediction of the frontier molecular orbital (FMO) energies demonstrate that the tautomeric structures exist in a static mixture in the ground state, with the enol and thiol structure being more stable than the keto and thione structures in gas phase. The ethanol solvent causes some reordering of the relative stability of 2HPhAZ and 2MPhAZ conformers. The geometries created at the B3LYP/6–311 + + G(2d,2p) level of theory were used for NBO analysis. In the tautomerization of 2HPhAZ and its mercapto analogue 2-(2-Mercaptophenyl)-1-azaazulene (2MPhAZ), it has been found that the O(S)-C sigma bond is weak due to nO(S)—> σ*C25-O26(S26) and nO(S)—> σ*C15-N16 delocalization. It is also noted that the resulting p character of the corresponding oxygen (sulfur) natural hybrid orbital (NHO) of σO(S)-C bond orbital is related to the decreased occupancy of the localized σO(S)-C orbital in the idealized Lewis structure or the increased occupancy of σ*O(S)-C of the non-Lewis orbital and their subsequent impact on molecular stability and geometry (bond lengths) in gas phase and ethanol. Additionally, the energy of charge transfer decreases as the potential rotamers' Hammett constants (R1–R3 for O(S) atoms) increase. The partial charge distribution on the skeleton atoms demonstrates that the intra- and intermolecular interactions can be significantly influenced by the electrostatic attraction or repulsion between atoms. Lastly, the currently applied NBO-based HB strength indicator enables a fair prediction of the frequency of the proton donor NH stretching mode, but this simple picture is hidden by abundant hype conjugative effects.