The Arabidopsis chy1 mutant is resistant to indole-3-butyric acid, a naturally occurring form of the plant hormone auxin. Because the mutant also has defects in peroxisomal beta-oxidation, this resistance presumably results from a reduced conversion of indole-3-butyric acid to indole-3-acetic acid. We have cloned CHY1, which appears to encode a peroxisomal protein 43% identical to a mammalian valine catabolic enzyme that hydrolyzes beta-hydroxyisobutyryl-CoA. We demonstrated that a human beta-hydroxyisobutyryl-CoA hydrolase functionally complements chy1 when redirected from the mitochondria to the peroxisomes. We expressed CHY1 as a glutathione S-transferase (GST) fusion protein and demonstrated that purified GST-CHY1 hydrolyzes beta-hydroxyisobutyryl-CoA. Mutagenesis studies showed that a glutamate that is catalytically essential in homologous enoyl-CoA hydratases was also essential in CHY1. Mutating a residue that is differentially conserved between hydrolases and hydratases established that this position is relevant to the catalytic distinction between the enzyme classes. It is likely that CHY1 acts in peroxisomal valine catabolism and that accumulation of a toxic intermediate, methacrylyl-CoA, causes the altered beta-oxidation phenotypes of the chy1 mutant. Our results support the hypothesis that the energy-intensive sequence unique to valine catabolism, where an intermediate CoA ester is hydrolyzed and a new CoA ester is formed two steps later, avoids methacrylyl-CoA accumulation.