(E)-beta-Ocimene is one of the most commonly found monoterpenes of the volatile blends that are emitted from leaves in response to damage by herbivores or mechanical wounding. (E)-beta-Ocimene is also a component of many floral scents. Airborne (E)-beta-ocimene emitted from plants can serve as a chemical cue for the attraction of parasitoids or predators of plant herbivores and also as an attractant for pollinating insects. Furthermore, exposure of plants to (E)-beta-ocimene can activate defense gene expression. In this paper, we describe cDNA cloning and functional characterization of a gene encoding a highly specialized (E)-beta-ocimene synthase, AtTPS03, from Arabidopsis thaliana (L.) Heynh. AtTPS03 was identified as a member of the large AtTPS gene family of putative terpene synthases. A cDNA for AtTPS03 was expressed in Escherichia coli and the enzyme function identified in vitro. The A. thaliana (E)-beta-ocimene synthase produces almost exclusively (E)-beta-ocimene (94%) with minor amounts of the related acyclic monoterpenes (Z)-beta-ocimene (4%) and myrcene (2%). Transcripts for AtTPS03 were up-regulated in leaves of Arabidopsis in response to mechanical wounding and treatment with jasmonic acid, concurrent with induced emission of (E)-beta-ocimene. AtTPS03 provides an important gene for probing plant-insect and possibly plant-plant interactions mediated by terpenoid volatiles.