Among the active-site-serine penicillin-recognizing proteins, the Streptomyces R61 extracellular DD-peptidase is the only one to have a His-Thr-Gly sequence [instead of Lys-Thr(Ser)-Gly] in 'box' VII. The His residue was replaced by Gln or Lys. Both mutations induced a marked decrease in the rates of both tripeptide substrate hydrolysis and acylation by benzylpenicillin and cephalosporin C. The rate of hydrolysis of the thioester hippuryl thioglycollate was less affected. The most striking result was the disproportionate loss of transpeptidation properties by both mutants, indicating an important role of His-298 in this reaction. We believe that this result represents the first modification of a DD-peptidase leading to a specific decrease of the transpeptidation-to-hydrolysis ratio.