Squalene epoxidase (SE) catalyzes the conversion of squalene to (3S)-2,3-oxidosqualene. Photolabeling and site-directed mutagenesis were performed on recombinant rat SE (rrSE) in order to identify the location of the substrate-binding site and the roles of key residues in catalysis. Truncated 50-kDa rrSE was purified and photoaffinity labeled by competitive SE inhibitor (Ki=18.4 microM), [(3)H]TNSA-Dza. An 8-kDa CNBr/BNPS-skatole peptide was purified and the first 24 amino acids were sequenced by Edman degradation. The sequence PASFLPPSSVNKRGVLLLGDAYNL corresponded to residues 388-411 of the full-length rat SE. Three nucleophilic residues (Lys-399, Arg-400, and Asp-407) were labeled by [(3)H]TNSA-Dza. Triple mutants were prepared in which bulky groups were used to replace the labeled charged residues. Purified mutant enzymes showed lower enzymatic activity and reduced photoaffinity labeling by [(3)H]TNSA-Dza. This constitutes the first evidence as to the identity of the substrate-binding site of SE.