Photolysis of sodium 2-diazo-1-oxo-1,2-dihydronaphthalene-5-sulfonate and 4-tert-butylphenylphenyl 2-diazo-1-oxo-1,2-dihydronaphthalene-5-sulfonate in aliphatic alcohols results in the formation of a high yield of the corresponding sodium 3-(alkoxycarbonyl)-1H-indene-5-sulfonate and 4-tert-butylphenyl 3-(alkoxycarbonyl)-1H-indene-5-sulfonate, respectively. 1-Hydroxy-2-alkoxynaphthalene-5-sulfonates are formed as side products in these photoreactions. The observed maximum molar yield of the latter products was 8.8%. Photolysis of a solution of sodium 2-diazo-1-oxo-1,2-dihydronaphthalene-5-sulfonate in water yields, apart from the main photoproduct, sodium 3-carboxy-1H-indene-5-sulfonate, approximately 15% of the sodium 1,2-dihydroxynaphthalene-5-sulfonate. Both the nature of the side products of the photoreaction, as well as their yield as a function of the concentration of alcohol and water in various solvent mixtures, are a strong indication for the presence of a carbene intermediate in the reaction mechanism. Picosecond transient absorption measurements show that the internal conversion and vibrational relaxation to the ground state in the two diazo compounds mentioned above, takes place within 8 ps after excitation. The photofragmentation and formation of indenylidene-ketene is also completed within this same time period. In the case of 2-diazonaphthalen-1(2H)-one, the vibrational relaxation and photofragmentation take place within 8 ps, but in this particular case, a precursor of the ketene could be observed. This precursor has a decay rate constant of 5 x 10(10) s(-1) and is proposed to be the carbene.