The NIH shift is a chemical rearrangement in which a substituent on an aromatic ring undergoes an intramolecular migration, primarily during an enzymatic hydroxylation reaction. The molecular mechanism for the NIH shift of a carboxyl group has remained a mystery for 40 years. Here, we elucidate the molecular mechanism of the reaction in the conversion of para-hydroxybenzoate (PHB) to gentisate (GA, 2, 5-dihydroxybenzoate). Three genes (phgABC) from the PHB utilizer Brevibacillus laterosporus PHB-7a encode enzymes (p-hydroxybenzoyl-CoA ligase, p-hydroxybenzoyl-CoA hydroxylase and gentisyl-CoA thioesterase, respectively) catalyzing the conversion of PHB to GA via a route involving CoA thioester formation, hydroxylation concomitant with a 1, 2-shift of the acetyl CoA moiety and thioester hydrolysis. The shift of the carboxyl group was established rigorously by stable isotopic experiments with heterologously expressed phgABC, converting 2, 3, 5, 6-tetradeutero-PHB and [carboxyl-13 C]-PHB to 3, 4, 6-trideutero-GA and [carboxyl-13 C]-GA respectively. This is distinct from the NIH shifts of hydrogen and aceto substituents, where a single oxygenase catalyzes the reaction without the involvement of a thioester. The discovery of this three-step strategy for carboxyl group migration reveals a novel role of the CoA thioester in biochemistry and also illustrates the diversity and complexity of microbial catabolism in the carbon cycle.© 2018 John Wiley & Sons Ltd.