The lysosomal membrane enzyme acetyl-CoA:alpha-glucosaminide N-acetyltransferase catalyzes the transfer of the acetyl group from acetyl-CoA to terminal alpha-linked glucosamine residues of heparan sulfate. The reaction appears to be a transmembrane process: the enzyme is acetylated on the outside of the lysosome, and the acetyl group is transferred across the membrane to the inside of the lysosome where it is used to acetylate glucosamine. To determine the reactive site residues involved in the acetylation reaction, lysosomal membranes were treated with various amino acid modification reagents and assayed for enzyme activity. Although four thiol modification reagents were examined, only one, p-chloromercuribenzoate inactivated the N-acetyltransferase. Thiol modification by p-chloromercuribenzoate did not appear to occur at the active site since inactivation was still observed in the presence of the substrate acetyl-CoA. N-Acetyltransferase could be inactivated by N-bromosuccinimide, even after pretreatment with reagents specific for tyrosine and tryptophan, suggesting that the modified residue is a histidine. Diethyl pyrocarbonate, another histidine modification reagent, could also inactivate the enzyme; this inactivation could be reversed by incubation with hydroxylamine. N-Bromosuccinimide and diethyl pyrocarbonate modifications appear to be at the active site of the enzyme since co-incubation with acetyl-CoA protects the N-acetyltransferase from inactivation. This protection is lost if glucosamine is also present. Pre-acetylated lysosomal membranes are also able to provide protection from N-bromosuccinimide inactivation, providing further evidence for a histidine moiety at the active site and for the existence of an acetyl-enzyme intermediate.