In Bacillus stearothermophilus ornithine acetyltransferase is a bifunctional enzyme, catalyzing the first and the fifth steps of arginine biosynthesis; it follows a ping-pong kinetic mechanism. A single chain precursor protein is cleaved between the alanine and threonine residues in a highly conserved ATML sequence leading to the formation of alpha and beta subunits that assemble into a heterotetrameric 2alpha2beta molecule. The beta subunit has been shown to form an acetylated intermediate in the course of the transacetylation reaction. The present data show that the precursor protein synthesized in vitro or in vivo undergoes a self-catalyzed cleavage involving an invariant threonine (Thr-197). Using site-directed mutagenesis T197G, T197S, and T197C derivatives have been generated. The T197G substitution abolishes both precursor protein cleavage and catalytic activity, whereas T197S and T197C substitutions reduce precursor cleavage and catalytic activity in the order Thr-197 (wild type) --> Ser-197 --> Cys-197. A mechanism is proposed in which Thr-197 plays a crucial role in the autoproteolytic cleavage of ornithine acetyltransferase.