An assay for the enzyme responsible for the addition of O-linked N-acetylglucosamine (O-GlcNAc) to proteins, a UDP-N-acetylglucosamine:peptide N-acetylglucosaminyltransferase, is reported using the synthetic peptide YSDSPSTST as the acceptor substrate. The activity is linearly dependent on time, enzyme, and substrate concentration. Replacement of the proline with a glycine in the peptide renders it ineffective as a substrate, whereas changing of the aspartic acid to a glycine has no effect. Product characterization of the glycosylated peptide demonstrates that the monosaccharide covalently attached to the peptide is N-acetylglucosamine (GlcNAc) and has not been epimerized to N-acetylgalactosamine. Mild base-catalyzed beta-elimination of the in vitro glycosylated peptide quantitatively yields GlcNAcitol, indicating that the GlcNAc is attached via an O-linkage. The transferase activity is strongly inhibited by UDP but is unaffected by GlcNAc or tunicamycin. Interestingly, EDTA only slightly inhibits activity, suggesting that the enzyme may not require divalent cations. The majority of the activity is soluble, and the remainder is lost from membranes after extracting with high salt and EDTA. Consistent with the subcellular localization of most proteins bearing O-GlcNAc, the activity appears to reside in the cytosolic portion of the cell when compared to two lumenal marker enzymes, galactosyltransferase and mannose-6-phosphatase.