Counterintuitively, the low basicity of the NH2 group in hydrazides makes them preferred nucleophiles for the synthesis of the N-substituted azaozonides in acid-catalyzed three-component condensation with 1,5-diketones and H2O2. In the case of more basic N sources, e.g., hydrazine and primary amines, such condensation does not occur under these reaction conditions. The method can be applied to a wide range of hydrazides and affords the target bicyclic azaozonides in 27-86% yields.