An oxygen-labile formaldehyde activation factor (FAF) was isolated in highly purified form by use of anoxic fractionation procedures. The molecular weight of FAF was determined to be 776 and that of methanopterin (MPT) 772 by fast-atom-bombardment mass spectrometry (FABMS). High-resolution FABMS measurements on MPT and FAF indicated molecular formulas of C(30)H(41)N(6)O(16)P and C(30)H(45)N(6)O(16)P, respectively. The presence of phosphorus was confirmed by 100-MHz (31)P NMR. The 360-MHz (1)H NMR spectrum of FAF in deuterium oxide was similar to that of MPT. A functional relationship between MPT and FAF was documented; both compounds stimulated the reductive demethylation of 2-(methylthio)ethanesulfonic acid (CH(3)-S-CoM) to CH(4) when formaldehyde oxidation provided a source of electrons, and FAF replaced MPT in the CH(3)-S-CoM-stimulated conversion of CO(2) to CH(4) under H(2) (the RPG effect). MPT was enzymically converted to FAF during the reduction of CH(3)-S-CoM, and HCHO to CH(4) under H(2). Evidence indicates that FAF is tetrahydromethanopterin.