Biodegradation pathways of synthetic nitroaromatic compounds and anilines are well documented, but little is known about those of nitroanilines. We previously reported that the initial step in 5-nitroanthranilic acid (5NAA) degradation by Bradyrhizobium sp. strain JS329 is a hydrolytic deamination to form 5-nitrosalicylic acid (5NSA), followed by ring fission catalyzed by 5NSA dioxygenase. The mechanism of release of the nitro group was unknown. In this study, we subcloned, sequenced, and expressed the genes encoding 5NAA deaminase (5NAA aminohydrolase, NaaA), 5NSA dioxygenase (NaaB) and lactonase (NaaC), the key genes responsible for 5NAA degradation. Sequence analysis and enzyme characterization revealed that NaaA is a hydrolytic metalloenzyme with a narrow substrate range. The nitro group is spontaneously eliminated as nitrite concomitant with the formation of a lactone from the ring fission product of 5NSA dioxygenation. The elimination of the nitro group during lactone formation is a previously unreported mechanism for denitration of nitro aliphatic compounds.