This review covers the functionally diverse type III polyketide synthase (PKS) superfamily of plant and bacterial biosynthetic enzymes. from the discovery of chalcone synthase (CHS) in the 1970s through the end of 2001. A broader perspective is achieved by a comparison of these CHS-like enzymes to mechanistically and evolutionarily related families of enzymes, including the type I and type II PKSs, as well as the thiolases and beta-ketoacyl synthases of fatty acid metabolism. As CHS is both the most frequently occurring and best studied type III PKS, this enzyme's structure and mechanism is examined in detail. The in vivo functions and biological activities of several classes of plant natural products derived from chalcones are also discussed. Evolutionary mechanisms of type III PKS divergence are considered, as are the biological functions and activities of each of the known and functionally divergent type III PKS enzymc families (currently twelve in plants and three in bacteria). A major focus of this review is the integration of information from genetic and biochemical studies with the unique insights gained from protein X-ray crystallography and homology modeling. This structural approach has generated a number of new predictions regarding both the importance and mechanistic role of various amino acid substitutions observed among functionally diverse type III PKS enzymes.