The mammalian AP-endonuclease (APE1) repairs apurinic/apyrimidinic (AP) sites and strand breaks with 3' blocks in the genome that are formed both endogenously and as intermediates during base excision repair. APE1 has an unrelated activity as a redox activator (and named Ref-1) for several trans-acting factors. In order to identify whether any of the seven cysteine residues in human APE1 affects its enzymatic function, we substituted these singly or multiply with serine. The repair activity is not affected in any of the mutants except those with C99S mutation. The Ser99-containing mutant lost affinity for DNA and its activity was inhibited by 10 mM Mg(2+). However, the Ser99 mutant has normal activity in 2 mM Mg(2+). Using crystallographic data and molecular dynamics simulation, we have provided a mechanistic basis for the altered properties of the C99S mutant. We earlier predicted that Mg(2+), with potential binding sites A and B, binds at the B site of wild-type APE1-substrate complex and moves to the A site after cleavage occurs, as observed in the crystal structure. The APE1-substrate complex is stabilized by a H bond between His309 and the AP site. We now show that this bond is broken to destabilize the complex in the absence of the Mg(2+). This effect due to the mutation of Cys99, approximately 16 A from the active site, on the DNA binding and activity is surprising. Mg(2+) at the B site promotes stabilization of the C99S mutant complex. At higher Mg(2+) concentration the A site is also filled, causing the B-site Mg(2+) to shift together with the AP site. At the same time, the H bond between His309 and the AP site shifts toward the 5' site of DNA. These shifts could explain the lower activity of the C99S mutant at higher [Mg(2+)]. The unexpected involvement of Cys99 in APE1's substrate binding and catalysis provides an example of involvement of a residue far from the active site.