Some strains of soil and marine bacteria have evolved intricate metabolic pathways for using environmentally derived aromatics as a carbon source. Many of these metabolic pathways go through intermediates such as vanillate, 3-O-methylgallate, and syringate. Demethylation of these compounds is essential for downstream aryl modification, ring opening, and subsequent assimilation of these compounds into the tricarboxylic acid (TCA) cycle, and, correspondingly, there are a variety of associated aryl demethylase systems that vary in complexity. Intriguingly, only a basic understanding of the least complex system, the tetrahydrofolate-dependent aryl demethylase LigM from Sphingomonas paucimobilis, a bacterial strain that metabolizes lignin-derived aromatics, was previously available. LigM-catalyzed demethylation enables further modification and ring opening of the single-ring aromatics vanillate and 3-Omethylgallate, which are common byproducts of biofuel production. Here, we characterize aryl O-demethylation by LigM and report its 1.81-Å crystal structure, revealing a unique demethylase fold and a canonical folate-binding domain. Structural homology and geometry optimization calculations enabled the identification of LigM's tetrahydrofolate-binding site and protein-folate interactions. Computationally guided mutagenesis and kinetic analyses allowed the identification of the enzyme's aryl-binding site location and determination of its unique, catalytic tyrosine-dependent reaction mechanism. This work defines LigM as a distinct demethylase, both structurally and functionally, and provides insight into demethylation and its reaction requirements. These results afford the mechanistic details required for efficient utilization of LigM as a tool for aryl O-demethylation and as a component of synthetic biology efforts to valorize previously underused aromatic compounds.