A palladium(0)-catalyzed rearrangement of piperidones and piperidines bearing a spirocyclopropane ring was developed. The ring expansion reaction led to a variety of functionalized caprolactam and azepane products in good to excellent yields. Experimental and computational mechanistic studies revealed an initial oxidative addition of the distal carbon鈥揷arbon bond of a cyclopropane ring to the palladium(0) catalyst and the relief of ring strain as a driving force for product formation.