L-(-)-Azetidine-2-carboxylate (AC) is a toxic, natural product analog of L-proline. This study revealed the genes and biochemical strategy employed by Pseudomonas sp. strain A2C to detoxify and assimilate AC as its sole nitrogen source. The gene region from Pseudomonas sp. strain A2C required for detoxification was cloned into Escherichia coli and sequenced. The 7.0-kb region contained eight identifiable genes. Four encoded putative transporters or permeases for γ-amino acids or drugs. Another gene encoded a homolog of 2-haloacid dehalogenase (HAD). The encoded protein, denoted L-azetidine-2- carboxylate hydrolase (AC hydrolase), was highly overexpressed by subcloning. The AC hydrolase was shown to catalyze azetidine ring opening with the production of 2-hydroxy-4-aminobutyrate. AC hydrolase was further demonstrated to be a new hydrolytic member of the HAD superfamily by showing loss of activity upon changing aspartate-12, the conserved active site nucleophile in this family, to an alanine residue. The presence of a gene encoding a potential export chaperone protein, CsaA, adjacent to the AC hydrolase gene suggested that AC hydrolase might be found inside the periplasm in the native Pseudomonas strain. Periplasmic and cytoplasmic cell fractions from Pseudomonas sp. strain A2C were prepared. A higher specific activity for AC hydrolysis was found in the periplasmic fraction. Protein mass spectrometry further identified AC hydrolase and known periplasmic marker proteins in the periplasmic fraction. A model was proposed in which AC is hydrolyzed in the periplasm and the product of that reaction is transported into and further metabolized in the cytoplasm.