Dimethylsulphoniopropionate (DMSP) accounts for up to 10% of carbon fixed by marine phytoplankton in ocean surface waters(1,2), producing an estimated 11.7-103 T mol S per year(3), most of which is processed by marine bacteria through the demethylation/demethiolation pathway(4). This pathway releases methanethiol (MeSH) instead of the climatically active gas dimethylsulphide (DMS) and enables marine microorganisms to assimilate the reduced sulphur(5-7). Despite recognition of this critical microbial transformation for over two decades, the biochemical pathway and enzymes responsible have remained unidentified. Here we show that three new enzymes related to fatty acid beta-oxidation constitute the pathway that assimilates methylmercaptopropionate (MMPA), the first product of DMSP demethylation/demethiolation, and that two previously unknown coenzyme A (CoA) derivatives, 3-methylmercaptopropionyl-CoA (MMPA-CoA) and methylthioacryloyl-CoA (MTA-CoA), are formed as novel intermediates. A member of the marine roseobacters, Ruegeria pomeroyi DSS-3, requires the MMPA-CoA pathway for MMPA assimilation and MeSH production. This pathway and the ability to produce MeSH from MMPA are present in diverse bacteria, and the ubiquitous SAR11 clade bacterium Pelagibacter ubique possesses enzymes for at least the first two steps. Analysis of marine metagenomic data indicates that the pathway is widespread among bacterioplankton in the ocean surface waters, making it one of the most important known routes for acquisition of reduced carbon and sulphur by surface ocean heterotrophs.