The reaction of 2-picoline N-oxide with phenylacetic anhydride proceeds by two paths: rearrangement to produce picolyl phenylacetate, 2-(β- phenylethyl)pyridine, other minor rearrangement products, and CO2, and oxidation to give benzaldehyde, 2-picoline, and CO2. The ratio of the competing processes is sensitive to the incorporation of deuterium at appropriate sites in the reactants, thereby permitting a convenient method for determining hydrogen isotope effects. For rearrangement, a primary kinetic isotope effect value (3.8 to 4.2) is obtained when reactions of methyl-deuterated and undeuterated 2-picoline N-oxide are compared, confirming earlier work on related systems that anhydro base formation is rate determining. Oxidation, however, manifests an inverse isotope effect (0.76 to 0.81, deuterium labeling at the methylene groups of phenylacetic anhydride) which, along with other evidence, suggests reversible enol or enolate formation prior to an SN1'-like rate- determining step to generate the reactive carbocation or its conjugate base. Solvent polarity also significantly, but not dramatically, affects the ratio of the competing pathways. A trend is established which supports the proposed mechanisms if they are modified to include ion pairing phenomena. Furthermore, the influence of solvent polarity was found to be consistent with a dual mode of fragmentation of the anhydro base intermediate.