The reaction mechanisms of rhodium-catalyzed geminal oxyfluorination and oxytrifluoromethylation of diazo-carbonyl compounds with fluoro-benziodoxole and Togni reagents are investigated by means of density functional theory calculations. It is shown that the two reactions follow very similar mechanisms, involving N-2 dissociation to form a Rh-carbene intermediate, alcohol insertion and proton transfer resulting in a stable Rh-enol intermediate, and concerted proton transfer/electrophilic addition of the hypervalent iodine reagent to the enol. Isomerization of the hypervalent iodine takes then place before a ligand coupling affords the final product. The role of the dirhodium catalyst in facilitating the various steps of the reaction is discussed. The presented mechanisms are consistent with available experimental information, and the obtained insights allow for extension to other reactions involving hypervalent iodine reagents.