Many methods report the scission of N–O bonds of aromatic heterocycles and their subsequent functionalization. Oxidative addition is one of the presumed pathways through which aromatic N–O bond activation with transition metals is achieved. We report the first well-defined pathway of (benz)­isoxazole’s aromatic N–O bond activation through oxidative addition. We also provide control experiments, which show that aromatic N–O bonds may be broken by strong inorganic reductants. These results highlight that N–O bonds are susceptible to both reduction and oxidative addition, which has important implications for catalysis. Exploring the reactivity of one of these complexes toward a series of electrophiles leads to the discovery of a Staudinger-type β-lactam synthesis upon the reaction with a ketene. Finally, we demonstrate that the choice of different metal/ligand combinations allows for selective oxidative addition into either C–I bonds or N–O bonds in the presence of the other.