The mode of CO2 assimilation known as C3-C4 intermediate photosynthesis provides intriguing insight into a novel mechanism for reducing photorespiratory CO2 loss and possible evolutionary pathways to C4 photosynthesis. Plants with the C3-C4 pathway have been reported from twenty-five species in nine genera representing six families, and they are principally associated with warm or hot habitats. The ecological distribution of C3-C4 plants is consistent with an adaptive role for re-assimilation of photorespired CO2 at warm temperatures. Photorespired CO2 is re-assimilated through the differential partitioning of photorespiratory organelles between mesophyll cells and bundle-sheath cells in C3-C4 intermediates, including total isolation of glycine decarboxylase activity to the bundle-sheath. Thus, glycine diffuses to the bundle sheath tissue, where photorespired CO2 is released and assimilated by surrounding chloroplasts before it can escape the leaf. Models of this ‘glycine shuttle’ reveal possible advantages in terms of CO2 assimilation rate, water-use efficiency, and nitrogen-use efficiency, though there are strong constraints on the fraction of RuBP carboxylation capacity that can be allocated to the bundle sheath to assimilate the photorespired CO2. The models further predict distinctive gas-exchange patterns with respect to the CO2 compensation point and discrimination against 13CO2. These predictions have been validated with gas-exchange measurements. One group of C3-C4 species (those belonging to the genus Flaveria) exhibit evidence of functional C4 biochemistry and assimilation of at least some atmospheric CO2 through the C4 pathway. In the Flaveria intermediates, photorespiration rates are reduced as in C3-C4 intermediates from other genera, and in several Flaveria species O2 inhibition of photosynthesis is reduced, suggesting the presence of a CO2-concentrating mechanism. It is not understood how photorespiration rates are reduced in these ‘biochemical intermediates,’ though there is evidence that at least part of it is due to the same glycine shuttle found in other C3-C4 intermediates. The glycine shuttle may represent an initial step in the evolutionary path to C4 photosynthesis.