ABSTRACT 1,2-Dichloroethane (DCA) is a problematic xenobiotic groundwater pollutant. Bacteria are capable of biodegrading DCA, but the evolution of such bacteria is not well understood. In particular, the mechanisms by which bacteria acquire the key dehalogenase genes dhlA and dhlB have not been well defined. In this study, the genomic context of dhlA and dhlB was determined in three aerobic DCA-degrading bacteria ( Starkeya novella strain EL1, Xanthobacter autotrophicus strain EL4, and Xanthobacter flavus strain EL8) isolated from a groundwater treatment plant (GTP). A haloalkane dehalogenase gene ( dhlA ) identical to the canonical dhlA gene from Xanthobacter sp. strain GJ10 was present in all three isolates, and, in each case, the dhlA gene was carried on a variant of a 37-kb circular plasmid, which was named pDCA. Sequence analysis of the repA replication initiator gene indicated that pDCA was a member of the pTAR plasmid family, related to catabolic plasmids from the Alphaproteobacteria , which enable growth on aromatics, dimethylformamide, and tartrate. Genes for plasmid replication, mobilization, and stabilization were identified, along with two insertion sequences (IS Xa1 and IS Pme1 ) which were likely to have mobilized dhlA and dhlB and played a role in the evolution of aerobic DCA-degrading bacteria. Two haloacid dehalogenase genes ( dhlB1 and dhlB2 ) were detected in the GTP isolates; dhlB1 was most likely chromosomal and was similar to the canonical dhlB gene from strain GJ10, while dhlB2 was carried on pDCA and was not closely related to dhlB1 . Heterologous expression of the DhlB2 protein confirmed that this plasmid-borne dehalogenase was capable of chloroacetate dechlorination. IMPORTANCE Earlier studies on the DCA-degrading Xanthobacter sp. strain GJ10 indicated that the key dehalogenases dhlA and dhlB were carried on a 225-kb linear plasmid and on the chromosome, respectively. The present study has found a dramatically different gene organization in more recently isolated DCA-degrading Xanthobacter strains from Australia, in which a relatively small circular plasmid (pDCA) carries both dhlA and dhlB homologs. pDCA represents a true organochlorine-catabolic plasmid, first because its only obvious metabolic phenotype is dehalogenation of organochlorines, and second because acquisition of this plasmid provides both key enzymes required for carbon-chlorine bond cleavage. The discovery of the alternative haloacid dehalogenase dhlB2 in pDCA increases the known genetic diversity of bacterial chloroacetate-hydrolyzing enzymes.