Plants produce toxic secondary metabolites as defense mechanisms against phytopathogenic microorganisms and predators. L-azetidine-2-carboxylic acid (AZC), a toxic proline analogue produced by members of the Liliaceae and Agavaciae families, is part of such a mechanism. AZC causes a broad range of toxic, inflammatory and degenerative abnormalities in human and animal cells, while it is known that some microorganisms have evolved specialized strategies for AZC resistance. However, the mechanisms underlying these processes are poorly understood. Here, we identify a widespread mechanism for AZC resistance in fungi. We show that the filamentous ascomycete Aspergillus nidulans is able to not only resist AZC toxicity but also utilize it as a nitrogen source via GABA catabolism and the action of the AzhA hydrolase, a member of a large superfamily of detoxifying enzymes, the haloacid dehalogenase-like hydrolase (HAD) superfamily. This detoxification process is further assisted by the NgnA acetyltransferase, orthologue of Mpr1 of Saccharomyces cerevisiae. We additionally show that heterologous expression of AzhA protein can complement the AZC sensitivity of S. cerevisiae. Furthermore, a detailed phylogenetic analysis of AzhA homologues in Fungi, Archaea and Bacteria is provided. Overall, our results unravel a widespread mechanism for AZC resistance among microorganisms, including important human and plant pathogens.