A methyltransferase enzyme catalysing the 3-O-methylation of isovanillic acid (3-hydroxy-4-methoxybenzoic acid) by S-adenosylmethionine (SAM) was identified in Phanerochaete chrysosporium and purified. Gel filtration indicated an M(r) of 71,000 and SDS-PAGE showed that the enzyme was composed of two subunits of M(r) approximately 36,000. Substrate utilization studies demonstrated that the enzyme was highly specific, displaying an exclusive preference for the methylation of the 3-hydroxyl group of several substituted benzoic acids. 3-Hydroxybenzoic acids with a methoxyl or hydroxyl substituent in the 2 or 4 position were the best substrates with isovanillic and 3,4-dihydroxybenzoic acids showing the highest rates of methylation. The 3-O-methyltransferase enzyme was induced later in the growth cycle than the 4-O-methyltransferase previously isolated from this fungus, which is believed to have a role in the 4-O-methylation of lignin degradation products. However the function of this meta-specific enzyme, the first phenolic 3-O-methyltransferase isolated from a fungus, remains unclear. The combined activities of the 3- and 4-O-methyltransferase enzymes satisfactorily account for the pattern of SAM-dependent methylating activity shown by whole mycelia to phenolic substrates.