The photoinduced rearrangement reaction mechanism of 1,2,3-thiadiazole remains experimentally elusive. Two possible mechanisms have been proposed to date. The first is a stepwise mechanism via a thiocarbene intermediate; the second is an excited-state concerted rearrangement mechanism. Herein we have adopted both the electronic structure calculations and nonadiabatic dynamics simulations to study the photoinduced rearrangement reactions of 1,2,3-thiadiazole in the S2, S1, and S0 states in solution. On the basis of QM(CASPT2)/MM [quantum mechanics(complete active space self-consistent field second-order perturbation theory)/molecular mechanics] calculations, we have found that (1) the thiocarbene intermediate is not stable; thus, the stepwise mechanism should be unfavorable; (2) the excited-state decay from the S2 via S1 to S0 state is ultrafast and completed within ca. 200 fs; therefore, both the S2 and S1 states should not have a long enough time for the excited-state rearrangements. Instead, we have computationally proposed a modified photoinduced rearrangement mechanism. Upon irradiation, the S2 state is first populated (114.0 kcal/mol), followed by an ultrafast S2 → S1 → S0 excited-state decay along the S-N bond fission, which eventually leads to a very "hot" intermediate with the S-N bond broken (18.3 kcal/mol). Then, thermal rearrangements to thioketene, thiirene, and ethynethiol occur in a concerted asynchronous way. This mechanistic scenario has been verified by full-dimensional trajectory-based nonadiabatic dynamics simulations at the QM(CASPT2)/MM level. Finally, our present computational work provides experimentally interesting mechanistic insights into the photoinduced rearrangement reactions of cyclic and acyclic diazo compounds.