Tetrahydropterin-dependent aromatic amino acid hydroxylases (AAHs) are known from animals and microbes but not plants. A survey of genomes and ESTs revealed AAH-like sequences in gymnosperms, mosses, and algae. Analysis of full-length AAH cDNAs from Pinus taeda, Physcomitrella patens, and Chlamydomonas reinhardtii indicated that the encoded proteins form a distinct clade within the AAH family. These proteins were shown to have Phe hydroxylase activity by functional complementation of an Escherichia coli Tyr auxotroph and by enzyme assays. The P. taeda and P. patens AAHs were specific for Phe, required iron, showed Michaelian kinetics, and were active as monomers. Uniquely, they preferred 10-formyltetrahydrofolate to any physiological tetrahydropterin as cofactor and, consistent with preferring a folate cofactor, retained activity in complementation tests with tetrahydropterin-depleted E. coli host strains. Targeting assays in Arabidopsis thaliana mesophyll protoplasts using green fluorescent protein fusions, and import assays with purified Pisum sativum chloroplasts, indicated chloroplastic localization. Targeting assays further indicated that pterin-4a-carbinolamine dehydratase, which regenerates the AAH cofactor, is also chloroplastic. Ablating the single AAH gene in P. patens caused accumulation of Phe and caffeic acid esters. These data show that nonflowering plants have functional plastidial AAHs, establish an unprecedented electron donor role for a folate, and uncover a novel link between folate and aromatic metabolism.