The diimino complex Rh(COD)(bdh)Cl (bdh: H2NNC(Me)C(Me)NNH2) reacts with o-diphenylphosphino(benzaldehyde) (PCHO) in the presence of PPh3 to give acylhydrido [Rh(H)(PCO)(PPh3)(bdh)]+ species. When using Rh/PCHO = 1:2 stoichiometric ratios, oxidative addition of one PCHO and P-coordination of another PCHO occurs. The aldehyde group then undergoes two competitive reactions: (i) addition of one free amino group to give a stable hemiaminal and a complex [Rh(H)(PCO)(Pbdh)]+ that contains a new PNN ligand coordinated via the imino nitrogens and the phosphorus atom or (ii) insertion into Rh−H to give the hydroxyalkyl complex [Rh(PCO)(PCHOH)(bdh)]+. The complexes have been fully characterized, and X-ray diffraction structures of both of them are reported. Some intermediates in the competitive reactions have been spectroscopically characterized, and the transformation of the hemiaminal group into imine to give a PaNN ligand in the complex [Rh(H)(PCO)(Pabdh)]+ has also been studied.