Glutathionylspermidine (Gsp) is a metabolite common to Escherichia coli and protozoal parasites of the Trypanosoma family. Though its role in E. coli is unknown, Gsp is known to be an intermediate in the biosynthesis of N1,N8-bis(glutathionyl)spermidine (trypanothione), a metabolite unique to trypanosomatids that may allow the parasites to overcome oxidative stresses induced by host defense mechanisms. The bifunctional Gsp-synthetase/amidase from E. coli catalyzes both amide bond formation and breakdown between the N1-amine of spermidine [N-(3-aminopropyl)-1,4-diaminobutane] and the glycine carboxylate of glutathione (gamma-Glu-Cys-Gly), with net hydrolysis of ATP [Bollinger et al. (1995) J. Biol. Chem. 270 (23), 14031-14041]. Synthetase and amidase activities reside in separate domains of the protein, and liberation of the amidase domain from the synthetase domain activates the amidase activity as much as 70-fold in kcat/K(m) for a chromogenic substrate gamma-Glu-Ala-Gly-pNA [Kwon et al., (1997) J. Biol. Chem. 272 (4), 2429-2436]. When substrates for the Gsp-synthetase activity are present (GSH, ATP-Mg2+), Gsp-amidase is highly activated (15-fold). We provide kinetic and mutagenesis evidence suggesting that the amidase operates by a nucleophilic attack mechanism involving cysteine as the catalytic nucleophile. Stopped-flow studies on the 25 kDa Gsp-amidase fragment and the 70 kDa full-length Gsp-synthetase/amidase with gamma-Glu-Ala-Gly-ONp demonstrate burst kinetics characteristic of a covalent acyl-enzyme intermediate. Studies using various group-specific protease inhibitors, such as iodoacetamide, suggest an active-site cysteine or histidine as being relevant to amidase activity, and site-directed mutagenesis indicates that Cys-59 is essential for amidase activity.