Natural auxin, indole-3-acetic acid (IAA), regulates various plant developmental processes and their response to environmental changes. Cellular IAA levels are modulated by three regulatory mechanisms, biosynthesis, polar transport, and inactivation. IAA is mainly synthesized from tryptophan (Trp) via indole-3-pyruvic acid by two-step reactions (IPA pathway) that are catalyzed by two enzymes, TAA1/TAR and YUCCA. The inactivation of IAA plays a crucial role in auxin homeostasis to maintain an appropriate cellular IAA level. Several metabolic enzymes have been implicated in auxin inactivation. GH3, UGT84B1, and IAMT1 enzymes catalyze the conjugation reaction of IAA, which is classified as reversible inactivation. DAO 2-oxoglutalate-dependent dioxygenase catalyzes the irreversible oxidative inactivation of auxin. This review summarizes the recent progress on IAA biosynthesis and inactivation pathways. We will discuss local IAA biosynthesis and the regulatory machinery modulating its homeostasis, and the main auxin oxidative inactivation pathway.