The crystal structure of Saccharomyces cerevisiae transketolase, a thiamine diphosphate dependent enzyme, has been determined to 2.5 A resolution. The enzyme is a dimer with the active sites located at the interface between the two identical subunits. The cofactor, vitamin B1 derived thiamine diphosphate, is bound at the interface between the two subunits. The enzyme subunit is built up of three domains of the alpha/beta type. The diphosphate moiety of thiamine diphosphate is bound to the enzyme at the carboxyl end of the parallel beta-sheet of the N-terminal domain and interacts with the protein through a Ca2+ ion. The thiazolium ring interacts with residues from both subunits, whereas the pyrimidine ring is buried in a hydrophobic pocket of the enzyme, formed by the loops at the carboxyl end of the beta-sheet in the middle domain in the second subunit. The structure analysis identifies amino acids critical for cofactor binding and provides mechanistic insights into thiamine catalysis.