Carbon-phosphorus lyase is a multienzyme system encoded by the phn operon that enables bacteria to metabolize organophosphonates when the preferred nutrient, inorganic phosphate, is scarce. One of the enzymes encoded by this operon, PhnP, is predicted by sequence homology to be a metal-dependent hydrolase of the beta-lactamase superfamily. Screening with a wide array of hydrolytically sensitive substrates indicated that PhnP is an enzyme with phosphodiesterase activity, having the greatest specificity toward bis(p-nitrophenyl)phosphate and 2',3'-cyclic nucleotides. No activity was observed toward RNA. The metal ion dependence of PhnP with bis(p-nitrophenyl)phosphate as substrate revealed a distinct preference for Mn(2+) and Ni(2+) for catalysis, whereas Zn(2+) afforded poor activity. The three-dimensional structure of PhnP was solved by x-ray crystallography to 1.4 resolution. The overall fold of PhnP is very similar to that of the tRNase Z endonucleases but lacks the long exosite module used by these enzymes to bind their tRNA substrates. The active site of PhnP contains what are probably two Mn(2+) ions surrounded by an array of active site residues that are identical to those observed in the tRNase Z enzymes. A second, remote Zn(2+) binding site is also observed, composed of a set of cysteine and histidine residues that are strictly conserved in the PhnP family. This second metal ion site appears to stabilize a structural motif.