1. When a species of Achromobacter grew with beta-phenylpropionate as carbon source, 2-hydroxy-beta-phenylpropionate and 2,3-dihydroxy-beta-phenylpropionate appeared in the growth medium. The concentrations of these compounds were maximal during exponential growth. 2. The cells contained an oxygenase that required Fe(2+) ions and cleaved the benzene nucleus between the adjacent carbon atoms that bear the side chain and one hydroxyl group of 2,3-dihydroxy-beta-phenylpropionate. 3. The ring-fission product, formed with the consumption of 1mol. of oxygen/mol. of substrate, was isolated and a chemical structure assigned. Sephadex-treated cell extracts converted 1mol. of this compound into 1mol. of 4-hydroxy-2-oxovalerate without oxygen consumption; succinic acid was also formed. 4. When Mn(2+) ions or Mg(2+) ions were added, dialysed extracts converted 4-hydroxy-2-oxovalerate into pyruvate and acetaldehyde, but the reaction did not proceed to completion.