The membrane protein AtTLP18.3 of Arabidopsis (Arabidopsis thaliana) contains a domain of unknown function, DUF477; it forms a polysome with photosynthetic apparatuses in the thylakoid lumen. To explore the molecular function of AtTLP18.3, we resolved its crystal structures with residues 83 to 260, the DUF477 only, and performed a series of biochemical analyses to discover its function. The gene expression of AtTLP18.3 followed a circadian rhythm. X-ray crystallography revealed the folding of AtTLP18.3 as a three-layer sandwich with three α-helices in the upper layer, four β-sheets in the middle layer, and two α-helices in the lower layer, which resembles a Rossmann fold. Structural comparison suggested that AtTLP18.3 might be a phosphatase. The enzymatic activity of AtTLP18.3 was further confirmed by phosphatase assay with various substrates (e.g. p-nitrophenyl phosphate, 6,8-difluoro-4-methylumbelliferyl phosphate, O-phospho-L-serine, and several synthetic phosphopeptides). Furthermore, we obtained the structure of AtTLP18.3 in complex with O-phospho-L-serine to identify the binding site of AtTLP18.3. Our structural and biochemical studies revealed that AtTLP18.3 has the molecular function of a novel acid phosphatase in the thylakoid lumen. DUF477 is accordingly renamed the thylakoid acid phosphatase domain.