Pyruvate oxidase from Escherichia coli is a peripheral membrane associated enzyme which is activated by lipids. We have investigated the high-affinity lipid binding site associated with lipid activation of pyruvate oxidase by covalent attachment of [14C]lauric acid to the enzyme. Lauric acid is bound stoichiometrically (1 mol/mol of active sites), and the enzyme is essentially irreversibly activated. Mild tryptic digestion of the modified enzyme shows that the lauric acid is bound within the last 100 residues of the 572-residue monomer. Digestion with thermolysin releases two closely related peptides, A and B, in approximately equal amounts. Comparison of the amino acid composition of peptide A with the entire sequence of the protein shows that peptide A corresponds to the sequence from Ala-543 to Ile-554. The analysis of peptide B is very similar to that of A. Limited sequence analysis of peptide B shows that residue 1 is Ala and residue 2 is labeled. These results support the assignment of residue 1 in peptide B as Ala-543 and indicate that lauric acid is bound to Lys-544. Previous work in this laboratory has shown that pyruvate oxidase may be activated independently of lipids by mild protease digestion. Proteolytic activation is accompanied by the release of a small peptide (residues 550-572) from the carboxyl terminus of the protein. The present work locates the lipid binding site very close to this peptide. The significance of these results for the mechanism of activation of pyruvate oxidase and other lipid-activated systems is discussed.