Abstract Cinnamyl alcohol dehydrogenase (CAD) (EC 126.96.36.199) is a key enzyme in lignin biosynthesis. It catalyzes cinnamyl aldehydes as substrates to form corresponding alcohols, the last step in monolignol biosynthesis. Almost all CAD members of land plants could be divided into three classes according to the phylogenetic analysis, together with gene structure and function. In the present investigation, two cDNAs encoding CADs were obtained from a Chinese liverwort Plagiochasma appendiculatum thallus library and were designated as PaCAD1 and PaCAD2. Phylogenetic analysis showed that PaCAD1 and PaCAD2 belonged to Class II. Full length cDNAs were heterologously expressed in E. coli and the recombinant PaCAD proteins displayed high activity levels using p-coumaryl, caffeyl, coniferyl, 5-hydroxyconiferyl and sinapyl aldehydes as substrates to form corresponding alcohols. The enzyme kinetics results showed that PaCAD1 and PaCAD2 used coniferyl aldehyde as the favourite substrate and showed high catalytic efficiency towards p-coumaryl aldehyde but lowest catalytic efficiency towards 5-hydroxyconiferaldehyde. In accord with the higher lignin content in the thallus than in the callus, the expression level of PaCAD2 was also higher in thallus than in the callus. The expression of PaCAD1 and PaCAD2 was induced by Methyl jasmonic acid (MeJA) treatment. This suggested that these two PaCADs played twin roles in lignin biosynthesis and the defencedefence of abiotic stress in P. appendiculatum. This is the first time that the CADs in liverworts have been functionally characterized.