The Arabidopsis FCLY gene encodes a specific farnesylcysteine (FC) lyase, which is responsible for the oxidative metabolism of FC to farnesal and cysteine. In addition, fcly mutants with quantitative decreases in FC lyase activity exhibit an enhanced response to ABA. However, the enzymological properties of the FCLY-encoded enzyme and its precise role in ABA signaling remain unclear. Here, we show that recombinant Arabidopsis FC lyase expressed in insect cells exhibits high selectivity for FC as a substrate and requires FAD and molecular oxygen for activity. Arabidopsis FC lyase is also shown to undergo post-translational N-glycosylation. FC, which is a competitive inhibitor of isoprenylcysteine methyltransferase (ICMT), accumulates in fcly mutants. Moreover, the enhanced response of fcly mutants to ABA is reversed by ICMT overexpression. These observations support the hypothesis that the ABA hypersensitive phenotype of fcly plants is the result of FC accumulation and inhibition of ICMT.