Human NTPDase 2 is a cell surface integral membrane glycoprotein that is anchored to the membranes by two transmembrane domains while the bulk of the protein containing the active site faces the extracellular milieu. It contains 10 conserved cysteine residues in the extracellular domain that are involved in disulfide bond formation and one free cysteine residue, C26, which is located in the N-terminal transmembrane domain. The human NTPDase 2 activity is inactivated by membrane perturbation that disrupts interaction of the transmembrane domains and is inhibited by p-chloromercuriphenylsulfonate (pCMPS), a sulfhydryl reagent. In this report, we show that C26 is the target of pCMPS modification, since a mutant in which C26 was replaced with a serine was no longer inhibited by pCMPS. Mutants in which cysteine residues are placed in the C-terminal transmembrane domain near the extracellular surface were still modified by pCMPS, but the degree of inhibition of their ATPase activity was lower than that of the wild-type enzyme. Thus, loss of the ATPase activity of human NTPDase 2 in the presence of pCMPS probably results from the disturbance of both transmembrane domain interaction and its active site. Inhibition of human NTPDase 2 activity by pCMPS and membrane perturbation is attenuated when the enzyme is cross-linked by glutaraldehyde. On the other hand, NTPDase 2 dimers formed from oxidative cross-linking of the wild-type enzyme and mutants containing a single cysteine residue in the C-terminal transmembrane domain displayed reduced ATPase activity. A similar reduction in activity was also obtained upon intramolecular disulfide formation in mutants that contain a cysteine residue in each of the two transmembrane domains. These results indicate that the mobility of the transmembrane helices is necessary for maximal catalysis.