In plants, O-methylation of phenolic compounds plays an important role in such processes as lignin synthesis, flower pigmentation, chemical defense, and signaling. However, apart from phenylpropanoids and flavonoids, very few enzymes involved in coumarin biosynthesis have been identified. We report here the molecular and biochemical characterization of a gene encoding a novel O-methyltransferase that catalyzes the methylation of 7,8-dihydroxycoumarin, daphnetin. The recombinant protein displayed an exclusive methylation of position 8 of daphnetin. The identity of the methylated product was unambiguously identified as 7-hydroxy-8-methoxycoumarin by co-chromatography on cellulose TLC and coelution from high performance liquid chromatography, with authentic synthetic samples, as well as by UV, mass spectroscopy, 1 H NMR spectral analysis, and NOE correlation signals of the relevant protons. Northern blot analysis and enzyme activity assays revealed that the transcript and corresponding enzyme activity are up-regulated by both low temperature and photosystem II excitation pressure. Using various phenylpropanoid and flavonoid substrates, we demonstrate that cold acclimation of rye leaves increases O-methyltransferase activity not only for daphnetin but also for the lignin precursors, caffeic acid, and 5-hydroxyferulic acid. The significance of this novel enzyme and daphnetin O-methylation is discussed in relation to its putative role in modulating cold acclimation and photosystem II excitation pressure.Low temperature is one of the most important environmental factors limiting the productivity and distribution of plants. Exposure of plants to low, nonfreezing temperatures, a process known as cold acclimation, induces the genetic system required for increased freezing tolerance. Knowledge of the molecular, physiological, and biochemical changes that occur during this process could lead to the improvement of plant productivity.This complex process has been extensively studied and several cold-responsive genes have been isolated from a range of dicotyledonous and monocotyledonous species (1, 2). Although the functions of some of these genes are known (3-6), the details of the processes responsible for their regulation and detection of temperature changes are still incomplete.Previous studies have shown that development of freezing tolerance in winter cereals, such as wheat and rye, is correlated with an increase in their photosynthetic capacity (7). Thus, growth at low temperature not only induces freezing tolerance, but also results in an increased resistance to low temperatureinduced photoinhibition of photosynthesis, and requires adjustment to a combination of light and low temperature. The common photosynthetic response of plants to low temperature and normal light is rationalized in terms of photosystem II (PSII) 1 excitation pressure, which is a measure of the redox state of the first electron acceptor, quinone A (7-9). It has been shown that cold-acclimated rye and wheat grown at 5°C/250 mol m Ϫ2 s Ϫ1