Sulphydryl oxidase, an enzyme isolated from milk, catalyses the de novo synthesis of disulphide bonds. Thiol groups in amino acids or their derivatives, peptides, and proteins are oxidized; molecular oxygen serves as the electron acceptor and undergoes a two-electron reduction to hydrogen peroxide. Michaelis constants vary considerably amongst various substrates; glutathione is a particularly good substrate. Inhibition studies and oxidation of 1,3-diphenylisobenzofuran suggest a mechanism involving an electron transfer to singlet O2 forming an enzyme-bound hydroperoxy group. Evidence for a direct interaction of the enzyme with horseradish peroxidase was also obtained. Although protein-folding appears to be thermodynamically favoured, rates of spontaneous acquisition of functional three-dimensional structures in disulphide-containing proteins have appeared disturbingly slow. In the presence of sulphydryl oxidase, functional structure is rapidly acquired by both reductively unfolded ribonuclease A and reductively denatured immobilized chymotrypsinogen A as judged by restoration of native fluorescence characteristics and biological activity. Preliminary data suggest that unlike thiol:protein-disulphide oxidoreductase, protein-disulphide isomerase, or GSSG/GSH redox systems, sulphydryl oxidase does not permit a 'reshuffling' of disulphide bonds.