The potent antioxidant properties of rosemary (Rosmarinus officinalis) extracts have been attributed to its major diterpene, carnosic acid. Carnosic acid has received considerable attention in food science and biomedicine, but little is known about its function in the plant in vivo. We recently found that highly oxidized diterpenes increase in rosemary plants exposed to drought and high light stress as a result of the antioxidant activity of carnosic acid (S. Munné-Bosch, K. Schwarz, L. Alegre [1999] Plant Physiol 121: 1047-1052). To elucidate the significance of the antioxidant function of carnosic acid in vivo we measured the relative amounts of carnosic acid and its metabolites in different compartments of rosemary leaves. Subcellular localization studies show that carnosic acid protects chloroplasts from oxidative stress in vivo by following a highly regulated compartmentation of oxidation products. Carnosic acid scavenges free radicals within the chloroplasts, giving rise to diterpene alcohols, mainly isorosmanol. This oxidation product is O-methylated within the chloroplasts, and the resulting form, 11,12-di-O-methylisorosmanol, is transferred to the plasma membrane. This appears to represent a mechanism of a way out for free radicals from chloroplasts. Carnosic acid also undergoes direct O-methylation within the chloroplasts, and its derived product, 12-O-methylcarnosic acid, accumulates in the plasma membrane. O-methylated diterpenes do not display antioxidant activity, but they may influence the stability of the plasma membrane. This study shows the relevance of the compartmentation of carnosic acid metabolism to the protection of rosemary plants from oxidative stress in vivo.