Allantoin and allantoic acid are the major forms of nitrogen transported from soybean nodules to other parts of the plant. Neither the pathway or the site of ureide synthesis has been demonstrated in root nodules.Bacteroid and cytosol (plant portion) fractions were prepared and the purity of each fraction was determined with marker enzymes. A pathway for ureide synthesis by the cytosol fraction of soybean nodules was established by measuring allantoic acid or NADH production. Enzymes were found in the cytosol fraction which would synthesize allantoic acid from the product of de novo purine synthesis, inosine-5'-monophosphate. Allantoic acid production by the nodule cytosol fraction with inosine-5'-monophosphate, inosine, xanthosine-5'-monophosphate, xanthosine, hypoxanthine, or xanthine as substrates was NAD(+)-dependent and blocked by allopurinol. Both bacteroid and cytosol fractions were capable of allantoic acid production with uric acid or allantoin as substrates. Allantoic acid synthesis from these two substrates was neither dependent on NAD(+) nor inhibited by allopurinol.These data suggest that the xanthine-oxidizing enzyme in the nodule is an NAD(+)-dependent xanthine dehydrogenase (EC 1.2.1.37) which is present only in the cytosol fraction. The NADH production by this enzyme plays a critical and energy-conserving role in the ureide synthetic pathway. Cytosol xanthine dehydrogenase activity was sufficient for the metabolism of fixed N since calculations showed similar rates of N(2) fixation and xanthine oxidation.