The phenylpropanoid pathway is one of the plant metabolic pathways most prominently linked to the transition to terrestrial life, but its evolution and early functions remain elusive. Here, we show that activity of the t-cinnamic acid 4-hydroxylase (C4H), the first plant-specific step in the pathway, emerged concomitantly with the CYP73 gene family in a common ancestor of embryophytes. Through structural studies, we identify conserved CYP73 residues, including a crucial arginine, that have supported C4H activity since the early stages of its evolution. We further demonstrate that impairing C4H function via CYP73 gene inactivation or inhibitor treatment in three bryophyte species—the moss Physcomitrium patens, the liverwort Marchantia polymorpha and the hornwort Anthoceros agrestis—consistently resulted in a shortage of phenylpropanoids and abnormal plant development. The latter could be rescued in the moss by exogenous supply of p-coumaric acid, the product of C4H. Our findings establish the emergence of the CYP73 gene family as a foundational event in the development of the plant phenylpropanoid pathway, and underscore the deep-rooted function of the C4H enzyme in embryophyte biology.