The sesquiterpene synthase germacradiene-4-ol synthase (GdolS) from Streptomyces citricolor is one of only a few known high-fidelity terpene synthases that convert farnesyl diphosphate (FDP) into a single hydroxylated product. Crystals of unliganded GdolS-E248A diffracted to 1.50 Å and revealed a typical class 1 sesquiterpene synthase fold with the active site in an open conformation. The metal binding motifs were identified as D(80)DQFD and N(218)DVRSFAQE. Some bound water molecules were evident in the X-ray crystal structure, but none were obviously positioned to quench a putative final carbocation intermediate. Incubations in H2(18)O generated labeled product, confirming that the alcohol functionality arises from nucleophilic capture of the final carbocation by water originating from solution. Site-directed mutagenesis of amino acid residues from both within the metal binding motifs and without identified by sequence alignment with aristolochene synthase from Aspergillus terreus generated mostly functional germacradien-4-ol synthases. Only GdolS-N218Q generated radically different products (∼50% germacrene A), but no direct evidence of the mechanism of incorporation of water into the active site was obtained. Fluorinated FDP analogues 2F-FDP and 15,15,15-F3-FDP were potent noncompetitive inhibitors of GdolS. 12,13-DiF-FDP generated 12,13-(E)-β-farnesene upon being incubated with GdolS, suggesting stepwise formation of the germacryl cation during the catalytic cycle. Incubation of GdolS with [1-(2)H2]FDP and (R)-[1-(2)H]FDP demonstrated that following germacryl cation formation a [1,3]-hydride shift generates the final carbocation prior to nucleophilic capture. The stereochemistry of this shift is not defined, and the deuteron in the final product was scrambled. Because no clear candidate residue for binding of a nucleophilic water molecule in the active site and no significant perturbation of product distribution from the replacement of active site residues were observed, the final carbocation may be captured by a water molecule from bulk solvent.