The protein product of the Methanococcus jannaschii MJ0768 gene has been expressed in Escherichia coli, purified to homogeneity, and shown to catalyze the GTP-dependent addition of two l-glutamates to the l-lactyl phosphodiester of 7,8-didemethyl-8-hydroxy-5-deazariboflavin (F(420)-0) to form F(420)-0-glutamyl-glutamate (F(420)-2). Since the reaction is the fifth step in the biosynthesis of coenzyme F(420), the enzyme has been designated as CofE, the product of the cofE gene. Gel filtration chromatography indicates CofE is a dimer. The enzyme has no recognized sequence similarity to any previously characterized proteins. The enzyme has an absolute requirement for a divalent metal ion and a monovalent cation. Among the metal ions tested, a mixture of Mn(2+), Mg(2+), and K(+) is the most effective. CofE catalyzes amide bond formation with the cleavage of GTP to GDP and inorganic phosphate, likely involving the activation of the free carboxylate group of F(420)-0 to give an acyl phosphate intermediate. Evidence for the occurrence of this intermediate is presented. A reaction mechanism for the enzyme is proposed and compared with other members of the ADP-forming amide bond ligase family.