Lignins are phenolic biopolymers synthesized by terrestrial, vascular plants for mechanical support and in response to pathogen attack. Peroxidases have been proposed to catalyse the dehydrogenative polymerization of monolignols into lignins, although no specific isoenzyme has been shown to be involved in lignin biosynthesis. Recently we isolated an extracellular anionic peroxidase, ATP A2, from rapidly lignifying Arabidopsis cell suspension culture and cloned its cDNA. Here we show that the Atp A2 promoter directs GUS reporter gene expression in lignified tissues of transgenic plants. Moreover, an Arabidopsis mutant with increased lignin levels compared to wild type shows increased levels of ATP A2 mRNA and of a mRNA encoding an enzyme upstream in the lignin biosynthetic pathway. The substrate specificity of ATP A2 was analysed by X-ray crystallography and docking of lignin precursors. The structure of ATP A2 was solved to 1.45 A resolution at 100 K. Docking of p-coumaryl, coniferyl and sinapyl alcohol in the substrate binding site of ATP A2 were analysed on the basis of the crystal structure of a horseradish peroxidase C-CN-ferulic acid complex. The analysis indicates that the precursors p-coumaryl and coniferyl alcohols are preferred by ATP A2, while the oxidation of sinapyl alcohol will be sterically hindered in ATP A2 as well as in all other plant peroxidases due to an overlap with the conserved Pro-139. We suggest ATP A2 is involved in a complex regulation of the covalent cross-linking in the plant cell wall.