Secretory, membrane, and lysosomal proteins undergo covalent modificat
ions and acquire their secondary and tertiary structure in the lumen o
f the endoplasmic reticulum (ER). In order to pass the ER quality cont
rol system and become transported to their final destinations, many of
them are also assembled into oligomers, We have recently determined t
he three-dimensional structure of lysosomal aspartylglucosaminidase (A
GA), which belongs to a newly discovered family of homologous amidohyd
rolases, the N-terminal nucleophile hydrolases. Members of this protei
n family are activated from an inactive precursor molecule by an autoc
atalytic proteolytic processing event whose exact mechanism has not be
en thoroughly determined. Here we have characterized in more detail th
e initial events in the ER required for the formation of active AGA en
zyme using transient expression of polypeptides carrying targeted amin
o acid substitutions. We show that His(124) at an interface between tw
o heterodimers of AGA is crucial for the thermodynamically stable olig
omeric structure of AGA. Furthermore, the side chain of Thr(206) is es
sential both for the proteolytic activation and enzymatic activity of
AGA. Finally, the proper geometry of the residues His(204)-Asp(205) se
ems to be crucial for the activation of AGA precursor polypeptides. We
propose here a reaction mechanism for the activation of AGA which cou
ld be valid for homologous enzymes as well.