Despite the importance of benzoic acid (BA) as a precursor for a wide array of primary and secondary metabolites, its biosynthesis in plants has not been fully elucidated. BA formation from phenylalanine requires shortening of the C-3 side chain by two carbon units, which can occur by a non-beta-oxidative route and/or a beta-oxidative pathway analogous to the catabolism of fatty acids. Enzymes responsible for the first and last reactions of the core BA beta-oxidative pathway (cinnamic acid -> cinnamoyl-CoA -> 3-hydroxy-3-phenylpropanoyl-CoA -> 3-oxo-3-phenylpropanoyl-CoA -> BA-CoA) have previously been characterized in petunia, a plant with flowers rich in phenylpropanoid/benzenoid volatile compounds. Using a functional genomics approach, we have identified a petunia gene encoding cinnamoyl-CoA hydratase-dehydrogenase (PhCHD), a bifunctional peroxisomal enzyme responsible for two consecutively occurring unexplored intermediate steps in the core BA beta-oxidative pathway. PhCHD spatially, developmentally, and temporally coexpresses with known genes in the BA beta-oxidative pathway, and correlates with emission of benzenoid volatiles. Kinetic analysis of recombinant PhCHD revealed it most efficiently converts cinnamoyl-CoA to 3-oxo-3-phenylpropanoyl-CoA, thus forming the substrate for the final step in the pathway. Down-regulation of PhCHD expression in petunia flowers resulted in reduced CHD enzyme activity, as well as decreased formation of BA-CoA, BA and their derived volatiles. Moreover, transgenic lines accumulated the PhCHD substrate cinnamoyl-CoA and the upstream pathway intermediate cinnamic acid. Discovery of PhCHD completes the elucidation of the core BA beta-oxidative route in plants, and together with the previously characterized CoA-ligase and thiolase enzymes, provides evidence that the whole pathway occurs in peroxisomes.