10-Formyltetrahydrofolate dehydrogenase (FDH) consists of two independent catalytic domains, N- and C-terminal, connected by a 100-amino acid residue linker (intermediate domain). Our previous studies on structural organization and enzymatic properties of rat FDH suggest that the overall enzyme reaction, i.e. NADP(+)-dependent conversion of 10-formyltetrahydrofolate to tetrahydrofolate and CO(2), consists of two steps: (i) hydrolytic cleavage of the formyl group in the N-terminal catalytic domain, followed by (ii) NADP(+)-dependent oxidation of the formyl group to CO(2) in the C-terminal aldehyde dehydrogenase domain. In this mechanism, it was not clear how the formyl group is transferred between the two catalytic domains after the first step. This study demonstrates that the intermediate domain functions similarly to an acyl carrier protein. A 4'-phosphopantetheine swinging arm bound through a phosphoester bond to Ser(354) of the intermediate domain transfers the formyl group between the catalytic domains of FDH. Thus, our study defines the intermediate domain of FDH as a novel carrier protein and provides the previously lacking component of the FDH catalytic mechanism.