In gram-negative bacteria, a pathway for aerobic degradation of phenylacetic acid (PAA) that proceeds via phenylacetyl-coenzyme A (CoA) and hydrolytic ring fission plays a central role in the degradation of a range of aromatic compounds. In contrast, the PAA pathway and its role are not well characterized in gram-positive bacteria. A cluster including 13 paa genes encoding enzymes orthologous to those of gram-negative bacteria was identified on the chromosome of Rhodococcus sp. strain RHA1. These genes were transcribed during growth on PAA, with 11 of the genes apparently in an operon yielding a single transcript. Quantitative proteomic analyses revealed that at least 146 proteins were more than twice as abundant in PAA-grown cells of RHA1 than in pyruvate-grown cells. Of these proteins, 29 were identified, including 8 encoded by the paa genes. Knockout mutagenesis indicated that paaN, encoding a putative ring-opening enzyme, was essential for growth on PAA. However, paaF, encoding phenylacetyl-CoA ligase, and paaR, encoding a putative regulator, were not essential. paaN was also essential for growth of RHA1 on phenylacetaldehyde, phenylpyruvate, 4-phenylbutyrate, 2-phenylethanol, 2-phenylethylamine, and l-phenylalanine. In contrast, growth on 3-hydroxyphenylacetate, ethylbenzene, and styrene was unaffected. These results suggest that the range of substrates degraded via the PAA pathway in RHA1 is somewhat limited relative to the range in previously characterized gram-negative bacteria.