Polyphenol oxidases (PPOs) are copper-binding enzymes of the plant secondary metabolism that oxidize polyphenols to quinones. Although PPOs are nearly ubiquitous in seed plants, knowledge on their evolution and function in other plant groups is missing. This study reports on the PPO gene family in the moss Physcomitrella patens (Hedw.) B.S.G. asan example for an early divergent plant. The P. patens PPO multigene family comprises 13 paralogues. Phylogenetic analyses suggest that plant PPOs evolved with the colonization of land and that PPO duplications within the monophyletic P. patens paralogue clade occurred after the separation of the moss and seed plant lineages. PPO functionality was demonstrated for recombinant PPO6. P. patens was analysed for phenolic compounds and six substances were detected intracellularly by LC-MS analysis: 4-hydroxybenzoic acid, p-cumaric acid, protocatechuic acid, salicylic acid, caffeic acid, and an ester of caffeic acid. Targeted PPO1 knockout (d|ppo1) plants were generated and plants lacking PPO1 exhibited only ~30% of the wild-type PPO activity in the culture medium, thus suggesting extracellular localization of PPO1, which is in contrast to the mostly plastidic PPO localization in seed plants. Further, d|ppo1 lines formed significantly more gametophores with a reduced areal plant size, which could be related to an increase of endogenously produced cytokinins and indicates an impact of PPO1 on plant development. d|ppo1 plants were less tolerant towards applied 4-methylcatechol compared to the wild type, which suggests a role of extracellular PPO1 in establishing appropriate conditions by the removal of inhibitory extracellular phenolic compounds.