The reaction of Fischer carbene-chromium complexes with 3-cyclobutene-1,2-diones has been investigated. In most cases, the major product of the reaction is the C-C bond insertion product, a 2-alkoxy-4-cyclopentene-1,3-dione, accompanied by a minor amount of the partial deoxygenation product, a 4-cyclopentene-1,3-dione. In some cases, 5-alkylidenefuranones are also formed. A mechanism involving oxidative. addition of the coordinatively unsaturated Fischer carbene complex followed by acyl migration and reductive elimination was proposed to account for cyclopentenedione formation. Furanone formation was thought to arise via demetalation of the acyl migration product, followed by O-acylation. An electronic dependence was noted for cyclopentenedione/alkylidene-furanone ratio, which was evaluated using the Hammett equation.