We have studied the inactivation of membrane-bound and solubilized UDP-glucose:ceramide glucosyltransferase from Golgi membranes by various types of sulfhydryl reagents. The strong inhibition of the membrane-bound form by the non-penetrant mercurial-type reagents clearly corroborated the fact that in sealed and “right-side-out” Golgi vesicles the ceramide glucosyltransferase is located on the cytoplasmic face. No significant differences in the susceptibility to the various sulfhydryl reagents were noted when solubilized enzyme was assayed, showing that solubilization does not reveal other critical SH groups. The different results obtained must be interpreted with regard to several thiol groups, essential for enzyme activity. No protection by the substrate UDP-glucose against mercurial-type reagents was obtained indicating that these thiol groups were not located in the nucleotide sugar binding domain. A more thorough investigation of the thiol inactivation mechanism was undertaken with NEM (N-ethylmaleimide), an irreversible reagent. The time dependent inactivation followed first order kinetics and provided evidence for the binding of 1 mol NEM per mol of enzyme. UDP-Glucose protected partially against NEM inactivation, indicating that the thiol groups may be situated in or near the substrate binding domain. Inactivation experiments with disulfide reagents showed that increased hydrophobicity led to more internal essential SH groups which are not obviously protected by the substrate UDP-glucose, thus not implicated in the substrate binding domain, but rather related to conformational changes of the enzyme during the catalytic process.