Serine racemase synthesizes d-serine, a physiological agonist of the NMDA receptor in mammalian brains. Schizosaccharomyces pombe produces serine racemase (spSR) that is highly similar to the brain enzyme. Our mass-spectrometric and X-ray studies revealed that spSR is modified with its natural substrate serine. spSR remains partially active even though its essential Lys57 inherently forming a Schiff base with the coenzyme pyridoxal 5'-phosphate is converted to N(6)-(R-2-amino-2-carboxyethyl)-l-lysyl (lysino-d-alanyl) residue. This indicates that the alpha-amino group of the d-alanyl moiety of the lysino-d-alanyl residue serves as a catalytic base in the same manner as the epsilon-amino group of Lys57 of the original spSR.