Analysis of the primary structure of peptide synthetases involved in non-ribosomal synthesis of peptide antibiotics revealed a highly conserved and ordered domain structure. These functional units, which are about 1000 amino acids in length, are believed to be essential for amino acid activation and thioester formation. To delineate the minimal extension of such a domain, we have amplified and cloned truncated fragments of the grsA gene, encoding the 1098-amino acid multifunctional gramicidin S synthetase 1, GrsA. The overexpressed His6-tagged GrsA derivatives were affinity-purified, and the catalytic properties of the deletion mutants were examined by biochemical studies including ATP-dependent amino acid activation, carboxyl thioester formation, and the ability to racemize the covalently bound phenylalanine from L- to the D-isomer. These studies revealed a core fragment (PheAT-His) that comprises the first 656 amino acid residues of GrsA, which restored all activities of the native protein, except racemization of phenylalanine. A further deletion of about 100 amino acids at the C-terminal end of the GrsA core fragment (PheAT-His), including the putative thioester binding motif LGGHSL, produced a 556-amino acid fragment (PheA-His) that shows a phenylalanine-dependent aminoacyl adenylation, but almost no thioester formation. A 291-amino acid deletion at the C terminus of the native GrsA, that contains a putative racemization site resulted in complete loss of racemization ability (PheATS-His). However, it retained the functions of specific amino acid activation and thioester formation. The results presented defined biochemically the minimum size of a peptide synthetase domain and revealed the locations of the functional modules involved in substrate recognition and ATP-dependent activation as well as in thioester formation and racemization.