Rabbit liver fructose-1,6-bisphosphatase, a tetramer of identical subunits was rapidly and irreversibly inactivated by o-phthalaldehyde at 25 degrees C (pH 7.3). The second-order rate constant for the inactivation was 30 M-1s-1. Fructose-1,6-bisphosphatase was completely protected from inactivation by the substrate--fructose-1,6-diphosphate but not by the allosteric effector--adenosine monophosphate. The absorption spectrum (lambda max 337 nm) and, fluorescence excitation (lambda max 360 nm) and fluorescence emission spectra (lambda max 405 nm) were consistent with the formation of an isoindole derivative in the subunit between a cysteine and a lysine residue about 3A apart. About 4 isoindole groups per mol of the bisphosphatase were formed following complete loss of the phosphatase activity. This suggests that the amino acid residues of the biphosphatase participating in reaction with o-phthalaldehyde more likely reside at or near the active site instead of allosteric site. The molar transition energy of fructose-1,6-bisphosphatase--o-phthalaldehyde adduct was estimated 121 kJ/mol and compares favorably with 127 kJ/mol for the synthetic isoindole, 1-[(beta-hydroxyethyl)thio]-2-(beta-hydroxyethyl) isoindole in hexane. It is, thus, concluded that the cysteine and lysine residues participating in isoindole formation in reaction between fructose-1,6-bisphosphatase and o-phthalaldehyde are located in a hydrophobic environment.