The precursor of the essential ether phospholipids is synthesized by a peroxisomal enzyme that uses a flavin cofactor to catalyze a reaction that does not alter the redox state of the substrates. The enzyme crystal structure reveals a V-shaped active site with a narrow constriction in front of the prosthetic group. Mutations causing inborn ether phospholipid deficiency, a very severe genetic disease, target residues that are part of the catalytic center. Biochemical analysis using substrate and flavin analogs, absorbance spectroscopy, mutagenesis, and mass spectrometry provide compelling evidence supporting an unusual mechanism of covalent catalysis. The flavin functions as a chemical trap that promotes exchange of an acyl with an alkyl group, generating the characteristic ether bond. Structural comparisons show that the covalent versus noncovalent mechanistic distinction in flavoenzyme catalysis and evolution relies on subtle factors rather than on gross modifications of the cofactor environment.