Escherichia coli divides by forming a septum across the middle of the cell. The biochemical mechanism underlying this process is unknown. Genetic evidence suggests that of all the fts (filamentation temperature sensitive) genes involved in E. coli cell division, ftsZ plays a central role at the earliest known step of septation. Here we show that FtsZ protein binds GTP in vitro using unusual sequence elements. In contrast, such binding to the product of the conditional-lethal ftsZ84 allele is impaired. Purified FtsZ displays a Mg(2+)-dependent GTPase activity which is markedly reduced in the FtsZ84 protein. FtsZ copurifies with near stoichiometric amounts of noncovalently-bound GDP, implying the presence of a GTPase cycle in vivo, similar to that known for signal-transducing GTP-binding proteins. We also show that a small fraction of FtsZ exists as a distinct membrane-associated species that binds GTP. The membrane association of FtsZ and the known ability of GTPases to act as molecular switches implicate FtsZ in a GTP-activated signal transduction pathway that may regulate the start of septation in E. coli.