In this study, wild-type lac permease and lac permease mutated at each of the eight cysteinyl residues in the molecule were solubilized from the membrane, purified, and reconstituted into proteoliposomes. Lactose equilibrium exchange and efflux activities of mutants with Ser in place of Cys117, Cys176, Cys234, Cys333, Cys353, or Cys355 are essentially the same as wild-type permease. In contrast, mutants in Cys148 and Cys154 exhibit diminished exchange and efflux activities. These mutants in Cys148 and Cys154, except for the C148S mutant, have previously been shown to slow down active transport as well [Van Iwaarden, P.R., Driessen, A. J. M., Menick, D. R., Kaback, H.R., & Konings, W. N. (1991) J. Biol. Chem. 266, 15688-15692]. C148S permease shows monophasic kinetics with a high apparent KM with respect to external lactose in the exchange reaction under nonequilibrium conditions, whereas wild-type permease exhibits biphasic kinetics with both a high and low KM component. Moreover, the absence of the low Km pathway in the C148S permease is correlated with the absence of a high-affinity binding site for p-nitrophenyl alpha-D-galactopyranoside (NPG). Interestingly, the affinity of the permease for NPG appears to increase with the hydrophobicity of the side chain at position 154 (Ser < Cys < Gly < Val). Finally, the presence of a high-affinity binding site for NPG in C154V is consistent with the biphasic exchange kinetics exhibited by this mutant. The results are discussed in the context of a model in which lac permease has two substrate binding sites, a catalytic site and a regulatory site.