Abstract A malonyl-enzyme intermediate, which functions in the transacylation of malonate from coenzyme A to acyl carrier protein (ACP) in Escherichia coli fatty acid synthesis, was isolated and characterized using purified and reduced malonyl-CoA-ACP transacylase. An enzymatically active malonyl-enzyme complex was isolated by Sephadex chromatography in 8 m urea, by trichloroacetic acid precipitation, and by Sephadex chromatography in aqueous buffer. The intermediate isolated by these procedures was shown to be free of CoA and capable of transferring the covalently bound malonyl group to CoA or ACP. Formation of malonyl-enzyme appeared to be a readily reversible reaction with a pH optimum between 6.0 and 7.5. Stability measurements of the malonyl-enzyme indicated a marked lability at pH values above 6.0, with a half-life of 30 to 40 min at pH 7.0 at 0°. The malonyl-enzyme linkage was shown to be stable to performic acid oxidation and labile to neutral hydroxylamine and alkaline pH. Denaturation of the malonyl-enzyme by urea at concentrations of 2.0 m or greater increased the stability of the malonyl-enzyme at various pH values and stabilized it to cleavage by hydroxylamine. Dilution of the urea concentration to 0.1 m permitted renaturation of the malonyl-enzyme, as indicated by its ability to transfer bound malonyl groups to CoA and its sensitivity to hydroxylamine and alkaline pH. A pH dependent inhibition of malonyl-enzyme formation was observed with the alkylating agents, N-ethylmaleimide and iodoacetamide. Treatment of the enzyme with phenylmethylsulfonylfluoride and p-chloromercuribenzoate also resulted in inhibition of malonyl-enzyme formation. p-Chloromercuribenzoate effects were shown to be reversed by 2-mercaptoethanol. Preincubation of the enzyme with malonyl-CoA prevented the inhibitory effects of all agents tested. Identification of the malonyl binding site on the enzyme was accomplished by proteolytic hydrolysis of [14C]malonyl-enzyme. Digestion of carboxymethylated [14C]malonyl-enzyme with thermolysin and purification of the labeled peptides by paper chromatography and Dowex 50 column chromatography resulted in the separation of five groups of labeled peptides, B through F. Treatment with performic acid indicated that the [14C]malonyl groups were not cleaved from these peptides by this treatment. Further purification of the major [14C]malonyl-peptide, D, by paper electrophoresis and by Dowex 50 chromatography after performic acid oxidation resulted in the isolation of a pure peptide with the amino acid composition alanine, glycine, histidine, and serine. Digestion of two of the [14C]malonyl-peptides, E and F, with aminopeptidase plus pronase resulted in the quantitative release of radioactive products having chromatographic properties identical with those of synthetic malonyl-O-serine. These experiments indicate that a serine residue of malonyl transacylase is the covalent binding site of malonyl groups in the malonyl-enzyme intermediate.