Aquatic nodulation on the tropical legume Sesbania rostrata occurs at lateral root bases via intercellular crack-entry invasion. A gene was identified (Srprx1) that is transiently up-regulated during the nodulation process and codes for a functional class III plant peroxidase. The expression strictly depended on bacterial nodulation factors (NFs) and could be modulated by hydrogen peroxide, a downstream signal for crack-entry invasion. Expression was not induced after wounding or pathogen attack, indicating that the peroxidase is a symbiosis-specific isoform. In situ hybridization showed Srprx1 transcripts around bacterial infection pockets and infection threads until they reached the central tissue of the nodule. A root nodule extensin (SrRNE1) colocalized with Srprx1 both in time and space and had the same NF requirement, suggesting a function in a similar process. Finally, in mixed inoculation nodules that were invaded by NF-deficient bacteria and differed in infection thread progression, infection-associated peroxidase transcripts were not observed. Lack of Srprx1 gene expression could be one of the causes for the aberrant structure of the infection threads.