P-flavin-bound luciferase, P-flavin-free luciferase, and P-flavin-bound beta-subunit of luciferase were prepared from Photobacterium phosphoreum using hydrophobic interaction chromatography after conventional purification using DEAE-cellulose chromatography and gel-filtration. The P-flavin-bound luciferase preparation contained about 20% P-flavin-free luciferase not removable by the present procedure. Since the specific activity of the P-flavin-bound luciferase preparation was about 20% of that of the P-flavin-free luciferase, it was concluded that the P-flavin-bound luciferase is an enzyme-product complex and has no more luciferase activity. Unlike the absorption spectrum of FP390 or other flavoproteins, that of P-flavin-bound luciferase preparation has a high absorption peak around 370 nm and resembles the spectrum synthesized by superposing the P-flavin-free luciferase spectrum on the P-flavin-bound beta-subunit spectrum: the P-flavin-bound beta-subunit spectrum is similar to that of FP390, while that of P-flavin-free luciferase has an absorption peak around 370 nm but practically no peak around 450 nm. In addition, P-flavin-free luciferase exhibits a weak but distinct NADH-FMN oxidoreductase activity. These results suggest that a prosthetic group, which absorbs around 370 nm, binds to the luciferase and that this compound is required to yield P-flavin; and they support the hypothesis that the physiological function of bacterial luciferase is to produce P-flavin. Furthermore, the presence of P-flavin-bound beta-subunit of the luciferase in the cell extract supports the hypothesis that physiological function of the lux operon is the biosynthesis of FP390 including its prosthetic group.