Dimethyl diazomethylphosphonate is a key reagent in organic synthesis, most notably in the Seyferth–Gilbert homologation for efficient conversion of aldehydes to terminal alkynes. It generates diazophosphonate ylides under basic conditions, enabling this transformation. It is also employed in cyclopropanation reactions as a carbene source to construct three-membered carbon rings, motifs common in biologically active compounds. Additionally, it facilitates the synthesis of phosphonates for applications in medicinal chemistry and agrochemicals. Its mild carbene generation makes it versatile for developing pharmaceuticals and fine chemicals.