Deaminoneuraminic acid residue-cleaving enzyme (KDNase Sm) is a new sialidase that has been induced and purified from Sphingobacterium multivorum. Catalysis by this new sialidase has been studied by enzyme kinetics and 1H NMR spectroscopy. Vmax/Km values determined for synthetic and natural substrates of KDNase Sm reveal that 4-methylumbelliferyl-KDN (KDNalpha2MeUmb, Vmax/Km = 0.033 min-1) is the best substrate for this sialidase, presumably because of its good leaving group properties. The transition state analogue, 2, 3-didehydro-2,3-dideoxy-D-galacto-D-glycero-nonulosonic acid, is a strong competitive inhibitor of KDNase Sm (Ki = 7.7 microM versus Km = 42 microM for KDNalpha2MeUmb). 2-Deoxy-2, 3-didehydro-N-acetylneuraminic acid and 2-deoxy-2, 3-didehydro-N-glycolylneuraminic acid are known to be strong competitive inhibitors for bacterial sialidases such as Arthrobacter ureafaciens sialidase; however, KDNase Sm activity is not significantly inhibited by these compounds. This observation suggests that the hydroxyl group at C-5 is important for recognition of the inhibitor by the enzyme. Reversible addition of water molecule (or hydroxide ion) to the reactive sialosyl cation, presumably formed at the catalytic site of KDNase Sm, eventually gives rise to two different adducts, the alpha- and beta-anomers of free 3-deoxy-D-glycero-D-galacto-nonulosonic acid. 1H NMR spectroscopic studies clearly demonstrate that the thermodynamically less stable alpha-form is preferentially formed as the first product of the cleavage reaction and that isomerization rapidly follows, leading to an equilibrium mixture of the two isomers, the beta-isomer being the major species at equilibrium. Therefore, we propose that KDNase Sm catalysis proceeds via a mechanism common to the known exosialidases, but the recognition of the substituent at C-5 by the enzyme differs.