Abstract Background 3-Hydroxypropionic acid (3-HP) is an important platform chemical, serving as a precursor for a wide range of industrial applications such as the production of acrylic acid and 1,3-propanediol. Although Escherichia coli or Saccharomyces cerevisiae are the primary industrial microbes for the production of 3-HP, alternative engineered hosts have the potential to generate 3-HP from other carbon feedstocks. Methylobacterium extorquens AM1, a facultative methylotrophic α-proteobacterium, is a model system for assessing the possibility of generating 3-HP from one-carbon feedstock methanol. Results Here we constructed a malonyl-CoA pathway by heterologously overexpressing the mcr gene to convert methanol into 3-HP in M. extorquens AM1. The engineered strains demonstrated 3-HP production with initial titer of 6.8 mg/l in shake flask cultivation, which was further improved to 69.8 mg/l by increasing the strength of promoter and mcr gene copy number. In vivo metabolic analysis showed a significant decrease of the acetyl-CoA pool size in the strain with the highest 3-HP titer, suggesting the supply of acetyl-CoA is a potential bottleneck for further improvement. Notably, 3-HP was rapidly degraded after the transition from exponential phase to stationary phase. Metabolomics analysis showed the accumulation of intracellular 3-hydroxypropionyl-CoA at stationary phase with the addition of 3-HP into the cultured medium, indicating 3-HP was first converted to its CoA derivatives. In vitro enzymatic assay and β-alanine pathway dependent 13C-labeling further demonstrated that a reductive route sequentially converted 3-HP-CoA to acrylyl-CoA and propionyl-CoA, with the latter being reassimilated into the ethylmalonyl-CoA pathway. The deletion of the gene META1_4251 encoding a putative acrylyl-CoA reductase led to reduced degradation rate of 3-HP in late stationary phase. Conclusions We demonstrated the feasibility of constructing the malonyl-CoA pathway in M. extorquens AM1 to generate 3-HP. Furthermore, we showed that a reductive route coupled with the ethylmalonyl-CoA pathway was the major channel responsible for degradation of the 3-HP during the growth transition. Engineered M. extorquens AM1 represents a good platform for 3-HP production from methanol.