The reaction of NH-indazoles with formaldehyde in aqueous hydrochloric acid has been experimentally studied by solution and solid-state nuclear magnetic resonance (NMR) and crystallography. The mechanism of the formation of N1-CH2OH derivatives was determined. For the first time, 2-substituted derivatives have been characterized by multinuclear NMR. Theoretically, calculations with gauge-invariant atomic orbitals (GIAOs) at the Becke three-parameter (exchange) Lee-Yang-Parr B3LYP/6-311++G(d,p) level have provided a sound basis for the experimental observations. The first X-ray structures of four (1H-indazol-1-yl)methanol derivatives are reported.