A strain of Bacillus sphaericus isolated from a local soil sample has been found to use beta,beta-dimethyl-DL-cysteine (DL-penicillamine) as the sole nitrogen source. Crude cell extract of the bacterium showed potent penicillamine-consuming activity only in the presence of NAD, which, however, was not used as an electron acceptor. Characterization of reaction products revealed that penicillamine was derivatized to a phosphoramide adduct with the ADP moiety of NAD, whereas the nicotinamide-ribose group was released and hydrolyzed spontaneously to ribose and nicotinamide. The phosphoramide product, ADP-penicillamine, caused potent product inhibition on the purified enzyme, and adenylate deaminase was found to be effective in converting the inhibitory product into inosine-diphosphate-penicillamine and thereby maintained the catalysis for several hours. The novel enzyme, termed as NAD:penicillamine ADP transferase, showed a single band on SDS-polyacrylamide gel electrophoresis with a mass of approximately 42 kDa. The native enzyme was monomeric. The enzyme showed high substrate specificity to NAD (Km = 13.0 mM) and L-penicillamine (Km = 6.5 mM); other nucleotides such as NADP, NAD(P)H, AMP, ADP, and ADP-ribose did not substitute for NAD, and L-valine, L-cysteine, L-homocysteine, L-cystine, L-leucine, and L-isoleucine did not serve as the substrate. Kinetic studies suggested an Ordered Bi Bi mechanism, with NAD as the first substrate to bind and ADP-L-penicillamine as the last product released. The novel NAD-dependent enzyme may catalyze the first step in penicillamine degradation in the strain of B. sphaericus.