Cyclodextrin glycosyltransferase (CGTase) is an industrially important enzyme that produces cyclodextrins (CD) from starch by intramolecular transglycosylation. CGTase consists of five globular domains labeled A through E. To better understand the role of domain E in CGTase catalysis, we have constructed several mutants of Bacillus macerans CGTase. Removing the entire E domain resulted in an inactive enzyme. Adding six amino acids between domains D and E caused a decrease in activity and thermostability. Replacing domain E with the similar starch-binding domain from Aspergillus awamori glucoamylase I caused a drastic decrease in activity, indicating the necessity of correct alignment of bound substrate. Substituting tyrosine residue 634 (Tyr634) with phenylalanine had very little effect on activity or thermostability. Substituting Tyr634 with glycine resulted in a 25% increase of specific cyclization and starch-hydrolyzing activities compared with that of the wild-type enzyme. The latter mutant was less thermostable. The results of this study indicate that domain E is important for the stability and integrity of B. macerans CGTase.