Enzymatic activation of PAA (phenylacetic acid) to phenylacetyl-CoA is an important step in the biosynthesis of the beta-lactam antibiotic penicillin G by the fungus Penicillium chrysogenum. CoA esters of PAA and POA (phenoxyacetic acid) act as acyl donors in the exchange of the aminoadipyl side chain of isopenicillin N to produce penicillin G or penicillin V. The phl gene, encoding a PCL (phenylacetate-CoA ligase), was cloned in Escherichia coli as a maltose-binding protein fusion and the biochemical properties of the enzyme were characterized. The recombinant fusion protein converted PAA into phenylacetyl-CoA in an ATP- and magnesium-dependent reaction. PCL could also activate POA, but the catalytic efficiency of the enzyme was rather low with k(cat)/K(m) values of 0.23+/-0.06 and 7.8+/-1.2 mM(-1).s(-1) for PAA and POA respectively. Surprisingly, PCL was very efficient in catalysing the conversion of trans-cinnamic acids to the corresponding CoA thioesters [k(cat)/K(m)=(3.1+/-0.4)x10(2) mM(-1).s(-1) for trans-cinnamic acid]. Of all the substrates screened, medium-chain fatty acids, which also occur as the side chains of the natural penicillins F, DF, H and K, were the best substrates for PCL. The high preference for fatty acids could be explained by a homology model of PCL that was constructed on the basis of sequence similarity with the Japanese firefly luciferase. The results suggest that PCL has evolved from a fatty-acid-activating ancestral enzyme that may have been involved in the beta-oxidation of fatty acids.