The anaerobic acetogenic bacterium Acetobacterium woodii couples reduction of caffeate with electrons derived from molecular hydrogen to the synthesis of ATP by a chemiosmotic mechanism with sodium ions as coupling ions. Caffeate is activated to caffeyl coenzyme A (caffeyl-CoA) prior to its reduction, and the caffeate reduction operon encodes an ATP-dependent caffeyl-CoA synthetase that is thought to catalyze the initial caffeate activation. The operon also encodes a potential CoA transferase, the product of carA, which was thought to be involved in subsequent ATP-independent caffeate activation. To prove the proposed function of carA, we overproduced its protein in Escherichia coli and then purified it. Purified CarA drives the formation of caffeyl-CoA from caffeate with hydrocaffeyl-CoA as the CoA donor. The dependence of the reaction on caffeate and hydrocaffeyl-CoA followed Michaelis-Menten kinetics, with apparent K(m) values of 75 ± 5 μM for caffeate and 8 ± 2 μM for hydrocaffeyl-CoA. The enzyme activity had broad ranges of pH and temperature optima. In addition to being able to use caffeate, CarA could use p-coumarate and ferulate but not cinnamate, sinapate, or p-hydroxybenzoate as a CoA acceptor. Neither acetyl-CoA nor butyryl-CoA served as the CoA donor for CarA. The enzyme uses a ping-pong mechanism for CoA transfer and is the first classified member of a new subclass of family I CoA transferases that has two catalytic domains on one polypeptide chain. Apparently, CarA catalyzes an energy-saving CoA loop for caffeate activation in the steady state of caffeate respiration.