In a previous study on yeast invertase (Reddy, A., and Maley, F. (1990) J. Biol. Chem. 265, 10817-10820), we identified Asp-23 through the procedures of affinity labeling and site-directed mutagenesis as a catalytic nucleophile. In the present study we undertook to determine other residues involved in the catalytic process. Earlier studies suggested histidine as a potential proton donor in the hydrolysis of sucrose, but by mutagenizing each of the enzyme's four histidines this amino acid was eliminated from consideration. Another candidate appeared to be cysteine, since iodine at about a 2-fold molar excess inactivated invertase by modifying both of the enzyme's cysteine residues. Dithiothreitol treatment restored the sulfhydryl groups and enzyme activity. Replacement of each of the cysteines with alanines revealed that C108A invertase retained full activity whereas C205A was reduced about 4-fold in its kcat. A comparison of the amino acid sequences of fructosylhydrolases revealed a conserved region coincident with Glu-204/Cys-205. Mutagenizing Glu-204 to Ala resulted in a 3, 000-fold reduction in the kcat of invertase indicating that Glu-204 plays a major role in catalysis. Based on these findings, a mechanism is proposed for the hydrolysis of sucrose which involves Asp-23 as a nucleophile and Glu-204 as an acid/base catalyst.