1. Crystalline horseradish peroxidase catalysed the oxidation of 2′,4,4′-trihydroxychalcone (isoliquiritigenin) in the presence of trace amounts of hydrogen peroxide under aerobic conditions. One atom of oxygen was consumed for each molecule of substrate. 2. The reaction course comprised a lag phase and a linear phase. The optimum pH for the linear phase of the reaction was about 7.5. The length of the lag phase decreased with increasing pH. It is suggested that the chalcone anion is the actual substrate for the reaction. 3. No evidence for the production of reducing free radicals or perhydroxyl radicals during the reaction could be found. 4. 4′,7-Dihydroxyflavonol and 4′,6-dihydroxyaurone were isolated from the reaction mixture. The immediate products of the reaction may have included 3,4′,7-trihydroxyflavanone and 4′,6-dihydroxy-2-(α-hydroxybenzyl)coumaran-one, which can be readily converted non-enzymically into the flavonol and aurone respectively. 5. A similar reaction was catalysed by cell-free extracts of hypocotyls of Phaseolus vulgaris. 6. The physiological significance of the reaction is discussed in terms of a possible free-radical mechanism. An analogy may exist between flavonoid biosynthesis and lignin formation.