Induced resistance of the mountain birch against its main defoliator Epirrita autumnata is a well-characterized phenomenon. The causal mechanism for this induced deterioration, however, has not been unequivocally explained, and no individual compound or group of traditional defensive compounds has been shown to explain the phenomenon. Phenolic compounds are the main secondary metabolites in mountain birch leaves, and the biological activity of phenolics usually depends on their oxidation. In this study, we found that the activity of polyphenoloxidases (PPOs), enzymes that oxidize o-diphenols to o-diquinones, was induced in trees with introduced larvae, and bioassays showed that both growth and consumption rates of larvae were reduced in damaged trees. PPO activity was negatively associated with both larval growth and consumption rates in trees with bagged larvae, but not in control trees. Our results suggest that the oxidation of phenolics by PPOs may be a causal explanation for the rapidly induced resistance of mountain birch against E. autumnata. This finding also helps to explain why correlations between insect performance and phenolics (without measuring indices explaining their oxidation) may not produce consistent results.