Escherichia coli is used as a model organism for elucidation of menaquinone biosynthesis, for which a hydrolytic step from 1,4-dihydroxy-2-naphthoyl-coenzyme A (DHNA-CoA) to 1,4-dihydroxy-2-naphthoate is still unaccounted for. Recently, a hotdog fold thioesterase has been shown to catalyze this conversion in phylloquinone biosynthesis, suggesting that its closest homolog, YbgC in Escherichia coli, may be the DHNA-CoA thioesterase in menaquinone biosynthesis. However, this possibility is excluded by the involvement of YbgC in the Tol-Pal system and its complete lack of hydrolytic activity toward DHNA-CoA. To identify the hydrolytic enzyme, we have performed an activity-based screen of all nine Escherichia coli hotdog fold thioesterases and found that YdiI possesses a high level of hydrolytic activity toward DHNA-CoA, with high substrate specificity, and that another thioesterase, EntH, from siderophore biosynthesis exhibits a moderate, much lower DHNA-CoA thioesterase activity. Deletion of the ydiI gene from the bacterial genome results in a significant decrease in menaquinone production, which is little affected in ΔybgC and ΔentH mutants. These results support the notion that YdiI is the DHNA-CoA thioesterase involved in the biosynthesis of menaquinone in the model bacterium.