Background: Microbes are rich sources of enzymes and esterases are one of the most important classes of enzymes because of their potential for application in the field of food, agriculture, pharmaceuticals and bioremediation. Due to limitations in their cultivation, only a small fraction of the complex microbial communities can be cultured from natural habitats. Thus to explore the catalytic potential of uncultured organisms, the metagenomic approach has turned out to be an effective alternative method for direct mining of enzymes of interest. Based on activity-based screening method, an esterase-positive clone was obtained from metagenomic libraries. Results: Functional screening of a soil metagenomic fosmid library, followed by transposon mutagenesis led to the identification of a 1179 bp esterase gene, estM2, that encodes a 392 amino acids long protein (EstM2) with a translated molecular weight of 43.12 kDa. Overproduction, purification and biochemical characterization of the recombinant protein demonstrated carboxylesterase activity towards short-chain fatty acyl esters with optimal activity for p-nitrophenyl butyrate at pH 8.0 and 37 °C. Amino acid sequence analysis and subsequent phylogenetic analysis suggested that EstM2 belongs to the family VIII esterases that bear modest similarities to class C β-lactamases. EstM2 possessed the conserved S-x-x-K motif of class C β-lactamases but did not exhibit β-lactamase activity. Guided by molecular docking analysis, EstM2 was shown to hydrolyze a wide range of di-and monoesters of alkyl-, aryl-and benzyl-substituted phthalates. Thus, EstM2 displays an atypical hydrolytic potential of biotechnological significance within family VIII esterases. Conclusions: This study has led to the discovery of a new member of family VIII esterases. To the best of our knowledge, this is the first phthalate hydrolase (EstM2), isolated from a soil metagenomic library that belongs to a family possessing β-lactamase like catalytic triad. Based on its catalytic potential towards hydrolysis of both phthalate diesters and phthalate monoesters, this enzyme may find use to counter the growing pollution caused by phthalatebased plasticizers in diverse geological environment and in other aspects of biotechnological applications.