H-protein, a component of the glycine cleavage system with lipoic acid as a prosthetic group, was expressed in Escherichia coli using a T7 RNA polymerase plasmid expression system. After induction with 25 microM isopropyl-beta-D-thiogalactopyranoside, bacteria harboring the recombinant plasmid expressed mature bovine H-protein as a soluble form at a level of about 10% of the total bacterial protein. Little of the H-protein was lipoylated in E. coli cultured without added lipoate, but when the cells were cultured in medium supplemented with 30 microM lipoate, about 10% of the recombinant protein expressed was the correctly lipoylated active form, 10% was an inactive aberrantly modified form, presumably with an octanoyl group, and the remaining 80% was the unlipoylated apoform. Each of the three forms was purified to homogeneity and shown to have the same NH2-terminal amino acid sequence as that of native bovine H-protein. The specific activity of the lipoylated form of H-protein expressed was consistent with that of H-protein purified from bovine liver. The purified recombinant apo-H-protein was lipoylated and consequently activated in vitro with lipoyl-AMP as a lipoyl donor by lipoyltransferase purified 150-fold from bovine liver mitochondria. The lipoylation was dependent on lipoyl-AMP, apo-H-protein, and lipoyltransferase. The partially purified lipoyltransferase had no lipoate-activating activity. These results provide the first evidence that in mammals two consecutive reactions are required for the attachment of lipoic acid to the acceptor protein: the activation of lipoic acid to lipoyl-AMP catalyzed by lipoate-activating enzyme and the transfer of the lipoyl group to an N epsilon-amino group of a lysine residue to apoprotein by lipoyl-AMP:N epsilon-lysine lipoyltransferase.