Small molecule demethylation is considered unusual in plants. Of the studied instances, the N-demethylation of nicotine is catalyzed by a Cyt P450 monooxygenase, while the O-dealkylation of alkaloids in Papaver somniferum is mediated by 2-oxoglutarate-dependent dioxygenases (2-ODDs). This report describes a 2-ODD regiospecifically catalyzing the 7-O-demethylation of methoxylated flavones in peltate trichomes of sweet basil (Ocimum basilicum L.). Three candidate 2-ODDs were identified in the basil trichome transcriptome database. Only the candidate designated ObF7ODM1 was found to be active with and highly specific for the proposed natural substrates, gardenin B and 8-hydroxysalvigenin. Of the characterized 2-ODDs, ObF7ODM1 is most closely related to O-demethylases from Papaver. The demethylase activity in trichomes from four basil chemotypes matches well with the abundance of ObF7ODM1 peptides and transcripts in the same trichome preparations. Treatment of basil plants with a 2-ODD inhibitor prohexadione-calcium significantly reduced the accumulation of 7-O-demethylated flavone nevadensin, confirming the involvement of a 2-ODD in its formation. Notably, the full-length open reading frame of ObF7ODM1 contains a second in-frame AUG codon 57 nucleotides downstream of the first translation initiation codon. Both AUG codons are recognized by bacterial translation machinery during heterologous gene expression. The N-truncated ObF7ODM1 is nearly inactive. The N-terminus essential for activity is unique to ObF7ODM1 and does not align with the sequences of other 2-ODDs. Further studies will reveal whether alternative translation initiation plays a role in regulating the O-demethylase activity in planta. Molecular identification of the flavone 7-O-demethylase completes the biochemical elucidation of the lipophilic flavone network in basil.