The reaction is closely related to the Curtius rearrangement except that in this reaction the acyl azide is produced by reaction of the carboxylic acid with hydrazoic acid via the protonated carboxylic acid, in a process akin to a Fischer esterification. An alternative, involving the formation of an acylium ion, becomes more important when the reaction takes place in concentrated acid. The carboxylic acid Schmidt reaction starts with acylium ion 1 obtained from protonation and loss of water. Reaction with hydrazoic acid forms the protonated azido ketone 2, which goes through a rearrangement reaction with the alkyl group R, migrating over the C-N bond with expulsion of nitrogen. The protonated isocyanate is attacked by water forming carbamate4, which after deprotonation loses carbon dioxide to the amine. In the reaction mechanism for the Schmidt reaction of ketones, the carbonyl group is activated by protonation for nucleophilic addition by the azide, forming azidohydrin 3, which loses water in an elimination reaction to diazoiminium 5. One of the alkyl or aryl groups migrates from carbon to nitrogen with loss of nitrogen to give a nitrilium intermediate 6, as in the Beckmann rearrangement. Attack by water converts 6 to protonated imidic acid7, which undergoes loss of proton to arrive at the imidic acid tautomer of the final amide. In an alternative mechanism, the migration occurs at 9, directly after protonation of intermediate 3, in a manner similar to the Baeyer-Villiger reaction to give protonated amide 10. Loss of a proton again furnishes the amide. It has been proposed that the dehydration to 3 to give 5 is favored by nonaqueous acids like conc. H2SO4, while aqueous acids like conc. HCl favor migration from 9. These possibilities have been used to account for the fact that, for certain substrates like α-tetralone, the group that migrates can sometimes change, depending on the conditions used, to deliver either of the two possible amides.
The scope of this reaction has been extended to reactions of carbonyls with alkyl azides R-N3. This extension was first reported by J.H. Boyer in 1955 , for example, the reaction of m-nitrobenzaldehyde with β-azido-ethanol: Variations involving intramolecular Schmidt reactions have been known since 1991. These are annulation reactions and have some utility in the synthesis of natural products; such as lactams and alkaloids.