By using a charcoal supported nano Cu⁰ catalyst (Cu/C), a highly efficient oxidation of α-diazo esters to α-ketoesters with molecular oxygen as the sole oxidant has been developed. In the presence of the Cu/C catalyst, 2-aryl-α-diazo esters with both electron-donating and electron-withdrawing groups can be oxidized to the corresponding α-ketoesters efficiently. Furthermore, this Cu/C catalyst can catalyse the reaction of aryl α-diazo ester with water to form aryl ketoester, 2-aryl-2-hydroxyl acetate ester and 2-aryl acetate ester. In this case, water is split by α-diazo ester, and the diazo group is displaced by the oxygen or hydrogen atom in water. Mechanistic investigation showed that the reaction of α-diazo ester with oxygen proceeds through a radical pathway. In the presence of 2,2,6,6-tetramethyl piperidine nitrogen oxide, the reaction of α-diazo ester with oxygen is dramatically inhibited. Furthermore, the reaction of α-diazo ester with water is investigated by an isotopic tracer method, and GCMS detection showed that a disproportionation reaction occurred between α-diazo ester and water.