Phosphoesterases are involved in the degradation of organophosphorus compounds. Although phosphomonoesterases and phosphotriesterases have been studied in detail, studies on phosphodiesterases are rather limited. In our search to find novel phosphodiesterases using metagenomic approach, we cloned a gene encoding a putative phosphodiesterase (PdeM) from the metagenome of the formation water collected from an Indian coal bed. Bioinformatic analysis showed that PdeM sequence possessed the characteristic signature motifs of the class III phosphodiesterases and phylogenetic study of PdeM enabled us to identify three distinct subclasses (A, B, and C) within class III phosphodiesterases, PdeM clustering in new subclass IIIB. Bioinformatic, biochemical and biophysical characterization of PdeM further revealed some of the characteristic features of the phosphodiesterases belonging to newly described subclass IIIB. PdeM is a monomer of 29.3 kDa, which exhibits optimum activity at 25°C and pH 8.5, but low affinity for bis(pNPP) as well as pNPPP. The recombinant PdeM possessed phosphodiesterase, phosphonate-ester hydrolase and nuclease activity. It lacked phosphomonoesterase, phosphotriesterase, and RNAse activities. Overexpression of PdeM in E.coli neither affected catabolite respression nor did the recombinant protein hydrolyzed cAMP in vitro, indicating its inability to hydrolyze cAMP. Although Mn2+ was required for the activity of PdeM, but addition of metals (Mn2+ or Fe3+) did not induce oligomerization. Further increase in concentration of Mn2+ upto 3 mM, increased α-helical content as well as the phosphodiesterase activity. Structural comparison of PdeM with its homologs showed that it lacked critical residues required for dimerization, cAMP hydrolysis, and for the high affinity binding of bis(pNPP). PdeM, thus, is a novel representative of new subclass of class III phosphodiesterases.