Covering: 1989 to 2003 Polyhydroxyalkanoates (PHAs) are biodegradable polymers with properties of thermoplastics. Production of these polymers in an economically competitive fashion via bioengineering requires an understanding of the biosynthetic pathway and its regulation. This review summarizes our current knowledge of the mechanism of the class I and III PHA synthases: the initiation, elongation and termination processes. It also summarizes our current understanding of the phase transition from soluble substrates (coenzyme A esters of β-hydroxyalkanoates) to insoluble granules and our understanding of the requirement for a transcription factor, phasin proteins, and depolymerases in PHA homeostasis.