Carbonyl reductase is highly susceptible to inactivation by organomercurials suggesting the presence of a reactive cysteine residue in, or close to, the active site. This residue is also close to a site which binds glutathione. Structurally, carbonyl reductase belongs to the short-chain dehydrogenase/reductase family and contains five cysteine residues, none of which is conserved within the family. In order to identify the reactive residue and investigate its possible role in glutathione binding, alanine was substituted for each cysteine residue of human carbonyl reductase by site-directed mutagenesis. The mutant enzymes were expressed in Escherichia coli and purified to homogeneity. Four of the five mutants (C26A, C122A C150A and C226A) exhibited wild-type-like enzyme activity, although K(m) values of C226A for three structurally different substrates were increased threefold to 10-fold. The fifth mutant, C227A, showed a 10-15-fold decrease in kcat and a threefold to 40-fold increase in K(m), resulting in a 30-500-fold drop in kcat/K(m). NaCl (300 mM) increased the activity of C227A 16-fold, whereas the activity of the wild-type enzyme was only doubled. Substitution of serine rather than alanine for Cys227 similarly affected the kinetic constants with the exception that NaCl did not activate the enzyme. Both C227A and C227S mutants were insensitive to inactivation by 4-hydroxymercuribenzoate. Unlike the parent carbonyl compounds, the glutathione adducts of menadione and prostaglandin A1 were better substrates for the C227A and C227S mutants than the wild-type enzyme. Conversely, the binding of free glutathione to both mutants was reduced. Our findings indicate that Cys227 is the reactive residue and suggest that it is involved in the binding of both substrate and glutathione.