Cellobiose dehydrogenase is an extracellular flavocytochrome, which catalyzes the oxidation of cellobiose and other soluble oligosaccharides to their respective lactones, while reducing various one- and two-electron acceptors. Two residues at the active site of the flavin domain, His689 and Asn732, have been proposed to play critical roles in the oxidation of the substrate. To test these proposals, each residue was substituted with either a Gln, Asn, Glu, Asp, Val, Ala, and/or a His residue by site-directed mutagenesis, using a homologous expression system previously developed in our laboratory. This enabled an examination of the functional, stereochemical, and electrostatic constraints for binding and oxidation of the substrate. The steady-state kinetic parameters for the variant proteins were compared using cellobiose and its epimer, lactose, as the substrates. The H689 variants all exhibit >1000-fold lower k(cat) values, while the K(m) values for both substrates in these variants are similar to that of the wild-type enzyme. This supports the proposed role of this His residue as a general base in catalysis. The N732 variants exhibit a range of kinetic parameters: the k(cat) values for oxidation are 5-4000-fold lower than that for the wild-type enzyme, while the K(m) values vary between similar to and 60-fold higher than that for the wild-type. The difference in binding energy between cellobiose and lactose was calculated using the relationship delta(delta G) = -RT ln[(k(cat)/K(m))(lactose)/(k(cat)/K(m))(cellobiose)]. This calculation for the wild-type enzyme suggests that lactose binds considerably more weakly than cellobiose (7.2 kJ/mol difference), which corresponds to one extra (cumulative) hydrogen bond for cellobiose over lactose. Mutations at Asn732 result in a further weakening of lactose binding over cellobiose (2-4 kJ/mol difference). The results support a role for Asn732 in the binding of the substrate.