The alkaline phosphatase superfamily comprises a large number of hydrolytic metalloenzymes such as phosphatases and sulfatases. We have characterised a new member of this superfamily, a phosphonate monoester hydrolase/phosphodiesterase from Rhizobium leguminosarum (RlPMH) both structurally and kinetically. The 1.42 Å crystal structure shows structural homology to arylsulfatases with conservation of the core α/β-fold, the mononuclear active site and most of the active-site residues. Sulfatases use a unique formylglycine nucleophile, formed by posttranslational modification of a cysteine/serine embedded in a signature sequence (C/S)XPXR. We provide mass spectrometric and mutational evidence that RlPMH is the first non-sulfatase enzyme shown to use a formylglycine as the catalytic nucleophile. RlPMH hydrolyses phosphonate monoesters and phosphate diesters with similar efficiency. Burst kinetics suggest that substrate hydrolysis proceeds via a double-displacement mechanism. Kinetic characterisation of active-site mutations establishes the catalytic contributions of individual residues. A mechanism for substrate hydrolysis is proposed on the basis of the kinetic data and structural comparisons with E. coli alkaline phosphatase and Pseudomonas aeruginosa arylsulfatase. RlPMH represents a further example of conservation of the overall structure and mechanism within the alkaline phosphatase superfamily.