GTP cyclohydrolase I of Escherichia coli is a torus-shaped homodecamer with D5 symmetry and catalyzes a complex ring expansion reaction conducive to the formation of dihydroneopterin triphosphate from GTP. The x-ray structure of a complex of the enzyme with the substrate analog, dGTP, bound at the active site was determined at a resolution of 3 A. In the decamer, 10 equivalent active sites are present, each of which contains a 10-A deep pocket formed by surface areas of 3 adjacent subunits. The substrate forms a complex hydrogen bond network with the protein. Active site residues were modified by site-directed mutagenesis, and enzyme activities of the mutant proteins were measured. On this basis, a mechanism of the enzyme-catalyzed reaction is proposed. Cleavage of the imidazole ring is initiated by protonation of N7 by His-179 followed by the attack of water at C8 of the purine system. Cystine Cys-110 Cys-181 may be involved in this reaction step. Opening of the imidazole ring may be in concert with cleavage of the furanose ring to generate a Schiff's base from the glycoside. The gamma-phosphate of GTP may be involved in the subsequent Amadori rearrangement of the carbohydrate side chain by activating the hydroxyl group of Ser-135.