PhnZ is a di‐iron‐dependent monooxygenase from the HD superfamily of metal ion‐dependent phosphohydrolases. These enzymes utilize a conserved histidine‐aspartate motif in the active site for metal ion binding. PhnZ is commonly found in marine bacteria where it works in tandem with the α‐ketoglutarate‐dependent dioxygenase PhnY to extract inorganic phosphate from the organophosphonate natural product 2‐aminoethylphosphonic acid. PhnY hydroxylates 2‐aminoethylphosphonic acid stereospecifically to generate (
R
)‐2‐amino‐1‐hydroxyethylphosphonic acid, whereupon PhnZ catalyzes the oxidative cleavage of the carbon–phosphorus bond yielding glycine and inorganic phosphate. Analysis of the metal ion dependence of PhnZ through activity assays, ICP‐MS, Mössbauer spectroscopy, and EPR spectroscopy have shown that this enzyme utilizes a mixed‐valence Fe(II)/Fe(III) di‐iron cofactor for catalysis. The X‐ray crystal structures of PhnZ have revealed that one Fe ion (Fe2) is used to bind the substrate in a bidentate manner, while the other Fe ion (Fe1) is likely used to reduce dioxygen. Two conserved active site residues, Y24 and E27, are observed to migrate in and out of the active site in response to substrate binding. Y24 is observed to bind Fe2, occupying the putative dioxygen binding site, but is expelled upon recognition of the substrate amino group by the residue E27. This is proposed to allow dioxygen to bind to Fe1, placing it well within proximity of the substrate bound at Fe2. A mechanism for oxidative carbon–phosphorus bond cleavage by PhnZ has been proposed based on these results. PhnZ not only represents the third known mechanism for enzymatic cleavage of CP‐bonds but also provides a window into the evolution of new functions within an enzyme superfamily.