The molecular basis of the ability of bacteria to live on caffeine via the C-8 oxidation pathway is unknown. The first step of this pathway, caffeine to trimethyluric acid (TMU), has been attributed to poorly characterized caffeine oxidases and a novel quinone-dependent caffeine dehydrogenase. Here, we report the detailed characterization of the second enzyme, a novel NADH-dependent trimethyluric acid monooxygenase (TmuM), a flavoprotein that catalyzes the conversion of TMU to 1,3,7-trimethyl-5-hydroxyisourate (TM-HIU). This product spontaneously decomposes to racemic 3,6,8-trimethylallantoin (TMA). TmuM prefers trimethyluric acids and, to a lesser extent, dimethyluric acids as substrates, but it exhibits no activity on uric acid. Homology models of TmuM against uric acid oxidase HpxO (which catalyzes uric acid to 5-hydroxyisourate) reveal a much bigger and hydrophobic cavity to accommodate the larger substrates. Genes involved in the caffeine C-8 oxidation pathway are located in a 25.2-kb genomic DNA fragment of CBB1, including cdhABC (coding for caffeine dehydrogenase) and tmuM (coding for TmuM). Comparison of this gene cluster to the uric acid-metabolizing gene cluster and pathway of Klebsiella pneumoniae revealed two major open reading frames coding for the conversion of TM-HIU to S-(+)-trimethylallantoin [S-(+)-TMA]. The first one, designated tmuH, codes for a putative TM-HIU hydrolase, which catalyzes the conversion of TM-HIU to 3,6,8-trimethyl-2-oxo-4-hydroxy-4-carboxy-5-ureidoimidazoline (TM-OHCU). The second one, designated tmuD, codes for a putative TM-OHCU decarboxylase which catalyzes the conversion of TM-OHCU to S-(+)-TMA. Based on a combination of enzymology and gene-analysis, a new degradative pathway for caffeine has been proposed via TMU, TM-HIU, TM-OHCU to S-(+)-TMA.