The circular dichroism of the dd-carboxypeptidase-transpeptidase from Streptomyces R61 shows in the near u.v. a set of weak extrema at 289nm (positive) and at 282, 275 and 268nm (all negative). In the far u.v. it shows negative extrema at 217-218 and 208nm, crossover at 202nm and a positive maximum at about 194nm. The u.v. absorption of the enzyme shows it to contain tyrosine and tryptophan in approx. 3.4:1 ratio. The enzyme is fluorescent with a maximum emission at 318-320nm. The near-u.v. circular dichroism of the protein is extensively affected by binding of penicillin G, but the far u.v. is unaffected. Binding of the antibiotic also causes quenching of the fluorescence of the enzyme. The latter effect has been used to study the binding of penicillin G to the enzyme and the influence exerted upon it by salts, denaturants and peptide substrates and inhibitors. High-affinity binding of penicillin appears to be comparatively slow and reversible, and can occur under conditions in which the protein is enzymically inactive. The thermal denaturation of the enzyme in guanidinium chloride at pH7 is affected by binding of the antibiotic. The presence of even large concentrations of beta-mercaptoethanol neither impaired the activity of the enzyme nor prevented its inhibition by penicillin G or cephalosporin C. A new hypothesis for the molecular mechanism of the interaction of the enzyme with penicillin is proposed.