Peroxidases (PODs) are believed to act as induced and constitutive defenses in plants against leaf-feeding insects. However, little work has examined the mode of action of PODs against insects. Putative mechanisms include the production of potentially antinutritive and/or toxic semiquinone free radicals and quinones (from the oxidation of phenolics), as well as increased leaf toughness. In this study, transgenic hybrid poplar saplings (Populus tremula × Populus alba) overexpressing horseradish peroxidase (HRP) were produced to examine the impact of elevated HRP levels on the performance and gut biochemistry of Lymantria dispar caterpillars. HRP-overexpressing poplars were more resistant to L. dispar than wild-type (WT) poplars when the level of a phenolic substrate of HRP (chlorogenic acid) was increased, but only when leaves had prior feeding damage. Damaged (induced) leaves produced increased amounts of hydrogen peroxide, which was used by HRP to increase the production of semiquinone radicals in the midguts of larvae. The decreased growth rates of larvae that fed on induced HRP-overexpressing poplars resulted from post-ingestive mechanisms, consistent with the action of HRP in their midguts. The toughness of HRP-overexpressing leaves was not significantly greater than that of WT leaves, whether or not they were induced. When leaves were coated with ellagitannins, induced HRP leaves also produced elevated levels of semiquinone radicals in the midgut. Decreased larval performance on induced HRP leaves in this case was due to post-ingestive mechanisms as well as decreased consumption. The results of this study provide the first demonstration that a POD is able to oxidize phenolics within an insect herbivore's gut, and further clarifies the chemical conditions that must be present for PODs to function as antiherbivore defenses.