The involvement of tyrosyl residues in the function of D-beta-hydroxybutyrate dehydrogenase, a lipid-requiring enzyme, has been investigated by using several tyrosyl modifying reagents, i.e., N-acetylimidazole, a hydrophilic reagent, and 7-chloro-4-nitrobenzo-2-oxa-1,3-diazole and tetranitromethane, two hydrophobic reagents. Modification of the tyrosyl residues highly inactivates the derived enzyme: Treatment of the enzyme with 7-chloro-4-nitro[14C]benzo-2-oxa-1,3-diazole leads to an absorbance at 380 nm and to an incorporation of about 1 mol of 7-chloro-4-nitrobenzo-2-oxa-1,3-diazole per polypeptide chain for complete inactivation. Inactivation by N-acetylimidazole induces a decrease in absorbance at 280 nm which can be reversed by hydroxylamine treatment. On the other hand, the ligands of the active site, such as methylmalonate, a pseudosubstrate, and NAD+ (or NADH), do not protect the enzyme against inactivation. In contrast, the presence of phospholipids strongly protects the enzyme against hydrophobic reagents. Finally, previous modification of the enzyme with N-acetylimidazole does not affect the incorporation of 7-chloro-4-nitro[14C]benzo-2-oxa-1,3-diazole while modification with tetranitromethane does. These results indicate the existence of two classes of tyrosyl residues which are essential for enzymatic activity, and demonstrate their location outside of the active site. One of these residues appears to be located close to the enzyme-phospholipid interacting sites. These essential residues may also be essential for maintenance of the correct active conformation.