Dermatan sulfate is a highly sulfated polysaccharide and has a variety of biological functions in development and disease. Iduronic acid domains in dermatan sulfate, which are formed by the action of two DS-epimerases, have a key role in mediating these functions. We have identified the catalytic site and three putative catalytic residues in DS-epimerase 1, His-205, Tyr-261, and His-450, by tertiary structure modeling and amino acid conservation to heparinase II. These residues were systematically mutated to alanine or more conserved residues, which resulted in complete loss of epimerase activity. Based on these data and the close relationship between lyase and epimerase reactions, we propose a model where His-450 functions as a general base abstracting the C5 proton from glucuronic acid. Subsequent cleavage of the glycosidic linkage by Tyr-261 generates a 4,5-unsaturated hexuronic intermediate, which is protonated at the C5 carbon by His-205 from the side of the sugar plane opposite to the side of previous proton abstraction. Concomitant recreation of the glycosidic linkage ends the reaction, generating iduronic acid. In addition, we show that proper N-glycosylation of DS-epimerase 1 is required for enzyme activity. This study represents the first description of the structural basis for epimerization by a glycosaminoglycan epimerase.