The diazo group has attributes that complement those of the azido group for applications in chemical biology. Here, we use computational analyses to provide insights into the chemoselectivity of the diazo group in 1,3-dipolar cycloadditions. Dipole distortion energies are responsible for ∼80% of the overall energetic barrier for these reactions. Here, we show that diazo compounds, unlike azides, provide an opportunity to decrease that barrier substantially without introducing strain into the dipolarophile. The ensuing rate enhancement is due to the greater nucleophilic character of a diazo group compared to that of an azido group, which can accommodate decreased distortion energies without predistortion. The tuning of distortion energies with substituents in a diazo compound or dipolarophile can enhance reactivity and selectivity in a predictable manner. Notably, these advantages of diazo groups are amplified in water. Our findings provide a theoretical framework that can guide the design and application of both diazo compounds and azides in "orthogonal" contexts, especially for biological investigations.