A novel reaction involving benzoxazole, ethyl diazoacetate, and water has been discovered, with Tp^Br3Cu(NCMe) (Tp^Br3 = hydrotris(3,4,5-tribromopyrazolyl)borate) as the catalyst. The fused azoles are converted into highly functionalized substituted benzenes bearing aldehyde, amine carboxylate and hydroxyl groups. The protocol has been applied for a series of benzoxazoles with several diazo compounds. Experimental data and theoretical calculations have led to a mechanistic proposal that includes carbene addition, ylide formation, and water addition to the latter, all those steps being catalyzed by the copper center.