We introduced the Escherichia coli glycolate catabolic pathway into Arabidopsis thaliana chloroplasts to reduce the loss of fixed carbon and nitrogen that occurs in C(3) plants when phosphoglycolate, an inevitable by-product of photosynthesis, is recycled by photorespiration. Using step-wise nuclear transformation with five chloroplast-targeted bacterial genes encoding glycolate dehydrogenase, glyoxylate carboligase and tartronic semialdehyde reductase, we generated plants in which chloroplastic glycolate is converted directly to glycerate. This reduces, but does not eliminate, flux of photorespiratory metabolites through peroxisomes and mitochondria. Transgenic plants grew faster, produced more shoot and root biomass, and contained more soluble sugars, reflecting reduced photorespiration and enhanced photosynthesis that correlated with an increased chloroplastic CO(2) concentration in the vicinity of ribulose-1,5-bisphosphate carboxylase/oxygenase. These effects are evident after overexpression of the three subunits of glycolate dehydrogenase, but enhanced by introducing the complete bacterial glycolate catabolic pathway. Diverting chloroplastic glycolate from photorespiration may improve the productivity of crops with C(3) photosynthesis.