Active-site residues in rat kidney gamma-glutamyltransferase (EC 18.104.22.168) were investigated by means of chemical modification. 1. In the presence of maleate, the activity was inhibited by phenylmethanesulphonyl fluoride, and the inhibition was not reversed by beta-mercaptoethanol, suggesting that a serine residue is close to the active site, but is shielded except in the presence of maleate. 2. Treatment of the enzyme with N-acetylimidazole modified an amino group, exposed a previously inaccessible cysteine residue and inhibited hydrolysis of the gamma-glutamyl-enzyme intermediate, but not its formation. 3. After reaction of the enzyme successively with N-acetylimidazole and with non-radioactive iodoacetamide/serine/borate, two active-site residues reacted with iodo[(14)C]acetamide. One of these possessed a carboxy group, which formed a [(14)C]glycollamide ester, and the other was cysteine, shown by isolation of S-[(14)C]carboxymethylcysteine after acid hydrolysis. When N-acetylimidazole treatment was omitted, only the carboxy group reacted with iodo[(14)C]acetamide. 4. Isolation of the gamma-[(14)C]glutamyl-enzyme intermediate was made easier by prior treatment of the enzyme with N-acetylimidazole. The gamma-glutamyl-enzyme bond was stable to performic acid, and to hydroxylamine/urea at pH10, but was hydrolysed slowly at pH12, indicating attachment of the gamma-[(14)C]glutamyl group in amide linkage to an amino group on the enzyme. Proteolysis of the gamma-[(14)C]glutamyl-enzyme after performic acid oxidation gave rise to a small acidic radioactive peptide that was resistant to further proteolysis and was not identical with gamma-glutamyl-epsilon-lysine. 5. A scheme for the catalytic mechanism is proposed.