The common nodulation genes nodABC are conserved in all rhizobia and are involved in synthesis of a lipooligosaccharide signal molecule. This bacterial signal consists of a chitooligosaccharide backbone, which carries at the nonreducing end a fatty acyl chain. The modified chitooligosaccharide molecule triggers development of nodules on the roots of the leguminous host plant. To elucidate the specific role of the NodB protein in nodulation factor synthesis, we have purified recombinant NodB and determined its biochemical role by direct assays. Our data show that the NodB protein of Rhizobium meliloti deacetylates the nonreducing N-acetylglucosamine residue of chitooligosaccharides. The monosaccharide N-acetylglucosamine is not deacetylated by NodB. In the pathway of Nod factor synthesis, deacetylation at the nonreducing end of the oligosaccharide backbone may be a necessary requirement for attachment of the fatty acyl chain.