Ether phospholipids are essential constituents of eukaryotic cell membranes. Rhizomelic chondrodysplasia punctata type 3 is a severe peroxisomal disorder caused by inborn deficiency of alkyldihydroxyacetonephosphate synthase (ADPS). The enzyme carries out the most characteristic step in ether phospholipid biosynthesis: formation of the ether bond. The crystal structure of ADPS from Dictyostelium discoideum shows a fatty-alcohol molecule bound in a narrow hydrophobic tunnel, specific for aliphatic chains of 16 carbons. Access to the tunnel is controlled by a flexible loop and a gating helix at the protein-membrane interface. Structural and mutagenesis investigations identify a cluster of hydrophilic catalytic residues, including an essential tyrosine, possibly involved in substrate proton abstraction, and the arginine that is mutated in ADPS-deficient patients. We propose that ether bond formation might be orchestrated through a covalent imine intermediate with the flavin, accounting for the noncanonical employment of a flavin cofactor in a nonredox reaction.