Myristoyl CoA:protein N-myristoyltransferase (NMT) catalyzes the addition of myristic acid to the amino-terminal glycine residues of a number of eukaryotic proteins. Recently, we developed a cell-free system for analyzing NMT activity and have begun to characterize the substrate specificity of this enzyme by using a series of synthetic peptides. We have now purified NMT from Saccharomyces cerevisiae to apparent homogeneity. The native enzyme is a 55-kDa protein, exhibits no requirement for divalent cation, and appears to contain a histidine residue critical for enzyme activity. A total of 42 synthetic peptides have been used to define structure/activity relationships in NMT substrates. An amino-terminal glycine is required for acylation; substitution with glycine analogues produces peptides that are inactive as substrates or inhibitors of NMT. A broad spectrum of amino acids is permitted at positions 3 and 4, while strict amino acid requirements are exhibited at position 5. Replacement of Ala5 in the peptide Gly-Asn-Ala-Ala-Ala-Ala-Arg-Arg with Asp ablates the peptide's myristoyl-accepting activity. A serine at this position results in a decrease by a factor of approximately equal to 500 in the apparent Km in the context of three different sequences. Penta- and hexa-peptides are substrates, but with decreased affinity. These studies establish that structural information important for NMT-ligand interaction exists beyond the first two amino acids in peptide substrates and that the side chains of residue 5 play a critical role in the binding of substrates to this enzyme.