Phytochelatin (PC) synthase has been assumed to be a gamma-glutamylcysteine dipeptidyl transpeptidase (EC 184.108.40.206) and, more recently, as exemplified by analyses of the immunopurified recombinant enzyme from Arabidopsis thaliana (AtPCS1-FLAG), has been shown to catalyze a PC synthetic reaction with kinetics that approximates a bisubstrate-substituted enzyme mechanism in which millimolar concentrations of free GSH and micromolar concentrations of heavy metal.GSH thiolates (e.g. cadmium.GS(2)) or millimolar concentrations of S-alkylglutathiones serve as cosubstrates. Here, we show, by direct analyses of the stoichiometry of AtPCS1-FLAG-catalyzed PC synthesis, the kinetics and stoichiometry of acylation of the enzyme and release of free glycine from gamma-Glu-Cys donors, and the effects of the Cys-to-Ser or -Ala and Ser-to-Ala substitution of conserved residues in the catalytic N-terminal half of the enzyme, that PC synthase is indeed a dipeptidyltransferase that undergoes gamma-Glu-Cys acylation at two sites during catalysis, one of which, in accord with a cysteine protease model, likely corresponds to or is at least tightly coupled with Cys(56). The identity of the second site of enzyme modification remains to be determined, but it is distinguishable from the first Cys(56)-dependent site, which is amenable to gamma-Glu-Cys acylation by free GSH, because its acylation not only depends on the provision of Cd(2+) or GSH with a blocked, S-alkylated thiol group, but is also necessary for net PC synthesis. We conclude that des-Gly-PCs are not generated as an immediate by-product, but rather that the enzyme catalyzes a dipeptidyl transfer reaction in which some of the energy liberated upon cleavage of the Cys-Gly bonds of the gamma-Glu-Cys donors in the first phase of the catalytic cycle is conserved through the formation of a two site-substituted gamma-Glu-Cys acyl-enzyme intermediate whose hydrolysis provides the energy required for the formation of the new peptide bond required for the extension of PC chain length by one gamma-Glu-Cys repeat per catalytic cycle.