Cell-free extracts prepared from a biotin auxotroph of Escherichia coli were active in catalyzing the synthesis of 7,8-diaminopelargonic acid, an intermediate of the biotin pathway, from 7-oxo-8-aminopelargonic acid. The product was identified on the basis of its chromatographic characteristics and its biotin activities for biotin auxotrophs of E. coli. Enzyme activity was determined in a reaction coupled with the desthiobiotin synthetase system, which is required for the conversion of 7,8-diaminopelargonic acid to desthiobiotin, and by measuring the amount of desthiobiotin formed by microbiological assay. The reaction was stimulated by l-methionine and pyridoxal-5'-phosphate. l-Methionine could not be replaced by any other amino acids tested. Pyridoxamine and pyridoxamine-5'-phosphate were as active as pyridoxal phosphate. The enzyme, presumably an aminotransferase, was demonstrable in the parent strain of E. coli and all mutant strains tested with the exception of a strain which is able to grow on diaminopelargonic acid but not on 7-oxo-8-aminopelargonic acid. Furthermore, the enzyme was repressible by biotin. The results were consistent with the hypothesis that the biosynthesis of 7,8-diaminopelargonic acid from 7-oxo-8-aminopelargonic acid is an obligatory step in the biosynthetic pathway of biotin in E. coli.