Chemical modification using thiol-directed agents and site-directed mutagenesis have been used to investigate the crucial role of an active site cysteine residue within the substrate-binding domain of human type I Ins(1,4,5)P3 5-phosphatase. Irreversible inhibition of enzymic activity is provoked by chemical modification of the enzyme by N-ethylmaleimide (NEM), 5,5'-dithio-2-nitrobenzoic acid, iodoacetate and to a much smaller extent by iodoacetämide. The alkylation reaction by NEM is prevented in the presence of Ins(1,4,5)P3. The results indicate that NEM binds at the active site of the enzyme with a stoichiometry of 0.9 mol of NEM per mol of enzyme. A single [14C]NEM-modified peptide was isolated after alpha-chymotrypsin proteolysis of the radiolabelled enzyme and reverse-phase HPLC. Sequence analysis of the active site-labelled peptide (i.e. MNTRCPAWCD) demonstrated that Cys348 contained the radiolabel. Furthermore two mutant enzymes were obtained by site-directed mutagenesis of the cysteine residue to serine and alanine respectively. Both mutant enzymes had identical UV CD spectra. The two mutants (i.e. Cys348-->Ser and Cys348-->Ala) show a marked loss of enzymic activity (more than 98% compared with the wild-type enzyme). Thus we have directly identified a reactive cysteine residue as part of the active site, i.e. the substrate-binding domain, of Ins(1,4,5)P3 5-phosphatase. This cysteine residue is part of a sequence 10 amino acids long that is well conserved among the primary structures of inositol and phosphatidylinositol polyphosphate 5-phosphatases.