PURPOSE: To obtain lactams each of which is useful as an intermediate for the production of an antibiotic in high quality and high yield by mixing a specified diazoester with rhodium carboxylate in an inert solvent in a specified temp. range.

CONSTITUTION: A diazoester expressed by formula I is mixed with a rhodium carboxylate having 2 to 10 carbon atoms such as rhodium tetraacetate or rhodium octanate in an inert solvent such as a halogenated hydrocarbon at 15 to 85°C to obtain the objective lactam expressed by formula II (wherein Y is expressed by formula III or IV). In formula I, R is H, amino, a protected amino, ethyl, hydroxyethyl; R1 is a carboxy protecting group; R2 is a 1 to 6 C alkyl, a 1 to 6 C substd. alkyl; and (n) is 1 or 2. The amt. of rhodium carboxylate is preferably 1 to 10 mol% of the diazoester.