The genomes of anaerobic ammonium-oxidizing (anammox) bacteria contain a gene cluster comprising genes of unusual fatty acid biosynthesis enzymes that were suggested to be involved in the synthesis of the unique "ladderane" lipids produced by these organisms. This cluster encodes an acyl carrier protein (denoted as "amxACP") and a variant of FabZ, an ACP-3-hydroxyacyl dehydratase. In this study, we characterize this enzyme, which we call anammox-specific FabZ ("amxFabZ"), to investigate the unresolved biosynthetic pathway of ladderane lipids. We find that amxFabZ displays distinct sequence differences to "canonical" FabZ, such as a bulky, apolar residue on the inside of the substrate binding tunnel, where the canonical enzyme has a glycine. Additionally, substrate screens suggest that amxFabZ efficiently converts substrates with acyl chain lengths of up to eight carbons, whereas longer substrates are converted much more slowly under the conditions used. We also present crystal structures of amxFabZs, mutational studies and the structure of a complex between amxFabZ and amxACP, which show that the structures alone cannot explain the apparent differences from canonical FabZ. Moreover, we find that while amxFabZ does dehydrate substrates bound to amxACP, it does not convert substrates bound to canonical ACP of the same anammox organism. We discuss the possible functional relevance of these observations in the light of proposals for the mechanism for ladderane biosynthesis.