(Iso)flavonoids are commonly accumulated as malonylated or acetylated glycoconjugates in legumes. Sequence analysis on EST database of the model legume Medicago truncatula enabled us to identify nine cDNA sequences encoding BAHD super-family enzymes that are distinct from the most of the characterized anthocyanin/flavonol acyltransferase genes in other species. Functional characterization revealed that three of these corresponding enzymes, MtMaT1, 2 and 3, specifically recognize malonyl CoA as an acyl donor and catalyze the malonylation of a range of isoflavone 7-O-glucosides in vitro. These malonyltransferase genes displayed distinct tissue-specific expression patterns and responded differentially to biotic and abiotic stresses. Consistent with gene expression, the level of the accumulated malonyl isoflavone glucoside was altered in the roots of M. truncatula grown under normal and drought-stressed conditions. Overexpression of the MtMaT1 gene in a previously engineered Arabidopsis line that accumulates genistein glycosides (Proc. Natl Acad. Sci. USA, 99, 2002:14578) led to a malonylated product. Confocal microscopy of the transiently expressed MtMaT1-GFP fusion revealed strong fluorescence in both the cytoplasm and nucleus of M. truncatula and tobacco leaf cells. A truncated MtMaT1 lacking the C-terminal polypeptide of 110 amino acid residues that include the DFGWG motif, the single conserved sequence signature of BAHD super-family members, retained considerable catalytic efficiency, but showed an altered optimum pH preference for maximum activity. Such C-terminal polypeptide deletion or deletion of the DFGWG motif alone led to improper folding of the transiently expressed GFP fusion protein in living cells, and impaired nuclear localization of the enzyme.