The rearrangement of phenylcarbene (1) to 1,2,4,6-cycloheptatetraene (3) has been studied theoretically, using SCF, CASSCF, CASPT2N, DFT (B3LYP), CISD, CCSD, and CCSD(T) methods in conjunction with the 6-31G*, 6-311+G*, 6-311G(2d,p), cc-pVDZ, and DZd basis sets. Stationary points were characterized by vibrational frequency analyses at CASSCF(8,8)/6-31G* and B3LYP/ 6-31G*. Phenylcarbene (1) has a triplet ground state (3A″) with a singlet-triplet separation (ΔEST) of 3-5 kcal mol-1. In agreement with experiment, chiral 3 is the lowest lying structure on this part of the C7H6 potential energy surface. Bicyclo[4.1.0]hepta-2,4,6-triene (2) is an intermediate in the rearrangement of 1 into 3, but it is unlikely to be observable experimentally due to a barrier height of only 1-2 kcal mol-1. The enantiomers of 3 interconvert via the 1A2 state of cycloheptatrienylidene (4) with an activation energy of 20 kcal mol-1. The "aromatic" 1A1 state, previously believed to be the lowest singlet state of 4, is roughly 10 kcal mol-1 higher in energy than the 1A2 state, and, in violation of Hund's rule, 3A2 is also calculated to lie above 1A2 in energy. Thus, even if 3A2 were populated, it is likely to undergo rapid intersystem crossing to 1A2. We suggest 3B1-4 is the metastable triplet observed by EPR.