Production of the antibiotic tropodithietic acid (TDA) depends on the central phenylacetate catabolic pathway, specifically on the oxygenase PaaABCDE, which catalyzes epoxidation of phenylacetyl-coenzyme A (CoA). Our study was focused on genes of the upper part of this pathway leading to phenylacetyl-CoA as precursor for TDA. Phaeobacter gallaeciensis DSM 17395 encodes two genes with homology to phenylacetyl-CoA ligases (paaK1 and paaK2), which were shown to be essential for phenylacetate catabolism but not for TDA biosynthesis and phenylalanine degradation. Thus, in P. gallaeciensis another enzyme must produce phenylacetyl-CoA from phenylalanine. Using random transposon insertion mutagenesis of a paaK1-paaK2 double mutant we identified a gene (ior1) with similarity to iorA and iorB in archaea, encoding an indolepyruvate:ferredoxin oxidoreductase (IOR). The ior1 mutant was unable to grow on phenylalanine, and production of TDA was significantly reduced compared to the wild-type level (60%). Nuclear magnetic resonance (NMR) spectroscopic investigations using (13)C-labeled phenylalanine isotopomers demonstrated that phenylalanine is transformed into phenylacetyl-CoA by Ior1. Using quantitative real-time PCR, we could show that expression of ior1 depends on the adjacent regulator IorR. Growth on phenylalanine promotes production of TDA, induces expression of ior1 (27-fold) and paaK1 (61-fold), and regulates the production of TDA. Phylogenetic analysis showed that the aerobic type of IOR as found in many roseobacters is common within a number of different phylogenetic groups of aerobic bacteria such as Burkholderia, Cupriavidis, and Rhizobia, where it may also contribute to the degradation of phenylalanine.