Formononetin (7-hydroxy-4'-methoxyisoflavone, also known as 4'-O-methyldaidzein) is an essential intermediate of ecophysiologically active leguminous isoflavonoids. The biosynthetic pathway to produce 4'-methoxyl of formononetin has been unknown because the methyl transfer from S-adenosyl-L-methionine (SAM) to 4'-hydroxyl of daidzein has never been detected in any plants. A hypothesis that SAM: daidzein 7-O-methyltransferase (D7OMT), an enzyme with a different regiospecificity, is involved in formononetin biosynthesis through its intracellular compartmentation with other enzymes recently prevails, but no direct evidence has been presented. We proposed a new scheme of formononetin biosynthesis involving 2,7,4'-trihydroxyisoflavanone as the methyl acceptor and subsequent dehydration. We now cloned a cDNA encoding SAM: 2,7,4'-trihydroxyisoflavanone 4'-O-methyltransferase (HI4'OMT) through the screening of functionally expressed Glycyrrhiza echinata (Fabaceae) cDNAs. The reaction product, 2,7-dihydroxy-4'-methoxyisoflavanone, was unambiguously identified. Recombinant G. echinata D7OMT did not show HI4'OMT activity, and G. echinata HI4'OMT protein free from D7OMT was partially purified. HI4'OMT is thus concluded to be distinct from D7OMT, and their distant phylogenetic relationship was further presented. HI4'OMT may be functionally identical to (+)-6a-hydroxymaackiain 3-OMT of pea. Homologous cDNAs were found in several legumes, and the catalytic function of the Lotus japonicus HI4'OMT was verified, indicating that HI4'OMT is the enzyme of formononetin biosynthesis in general legumes.