For most plant hormones, biological activity is suppressed by reversible conjugation to sugars, amino acids and other small molecules. In contrast, the conjugation of jasmonic acid (JA) to isoleucine (Ile) is known to enhance the activity of JA. Whereas hydroxylation and carboxylation of JA-Ile permanently inactivates JA-Ile-mediated signaling in plants, the alternative deactivation pathway of JA-Ile by its direct hydrolysis to JA remains unstudied. We show that Nicotiana attenuata jasmonoyl-l-isoleucine hydrolase 1 (JIH1), a close homologue of previously characterized indoleacetic acid alanine resistant 3 (IAR3) gene in Arabidopsis, hydrolyzes both JA-Ile and IAA-Ala in vitro. When the herbivory-inducible NaJIH1 gene was silenced by RNA interference, JA-Ile levels increased dramatically after simulated herbivory in irJIH1, compared with wild-type (WT) plants. When specialist (Manduca sexta) or generalist (Spodoptera littoralis) herbivores fed on irJIH1 plants they gained significantly less mass compared with those feeding on wild-type (WT) plants. The poor larval performance was strongly correlated with the higher accumulation of several JA-Ile-dependent direct defense metabolites in irJIH1 plants. In the field, irJIH1 plants attracted substantially more Geocoris predators to the experimentally attached M. sexta eggs on their leaves, compared with empty vector plants, which correlated with higher herbivory-elicited emissions of volatiles known to function as indirect defenses. We conclude that NaJIH1 encodes a new homeostatic step in JA metabolism that, together with JA and JA-Ile-hydroxylation and carboxylation of JA-Ile, rapidly attenuates the JA-Ile burst, allowing plants to tailor the expression of direct and indirect defenses against herbivore attack in nature.