Phenoloxidase (PO) activity was studied in Sydney rock oysters (Saccostrea glomerata). As in other molluscs, PO was found to exist as a pro-enzyme (proPO) in hemocytes. ProPO could be activated to PO by exogenous proteases (trypsin and chymotrypsin), exposure of hemocytes to pathogen-associated molecular patterns (PAMPs) and by the detergents, Triton X-100 and sodium dodecyl sulphate (SDS). Inhibition studies confirmed the proPO activating system of Sydney rock oysters is a proteinase cascade in which Ca²⁺ dependent serine proteinases proteolytically convert proPO into active PO. Activated PO was found to be a tyrosinase-like enzyme that is responsible for both monophenolase and diphenolase activity. The bifunctional PO had higher affinity for the monophenol, hydroquinine monomethyl ether (4HA) (Km = 4.45 ± 1.46 mM) than for the diphenol, l-DOPA (Km = 10.27 ± 1.33 mM). Maximum enzyme activity was evident at 37°C, pH 8 and at salinities of between 30 and 37 ppt. Melanogenesis catalysed by the active enzyme is a composite of eumelanin and the product of a sclerotin pathway combining DOPA decarboxylase with PO activity.