(E)-4-Hydroxy-3-methylbut-2-enyl diphosphate reductase (IspH or LytB) catalyzes the terminal step of the MEP/DOXP pathway where it converts (E)-4-hydroxy-3-methylbut-2-enyl diphosphate (HMBPP) into the two products, isopentenyl diphosphate and dimethylallyl diphosphate. The reaction involves the reductive elimination of the C4 hydroxyl group, using a total of two electrons. Here we show that the active form of IspH contains a [4Fe-4S] cluster and not the [3Fe-4S] form. Our studies show that the cluster is the direct electron source for the reaction and that a reaction intermediate is bound directly to the cluster. This active form has been trapped in a state, dubbed FeS(A), that was detected by electron paramagnetic resonance (EPR) spectroscopy when one-electron-reduced IspH was incubated with HMBPP. In addition, three mutants of IspH have been prepared and studied, His42, His124, and Glu126 (Aquifex aeolicus numbering), with particular attention paid to the effects on the cluster properties and possible reaction intermediates. None of the mutants significantly affected the properties of the [4Fe-4S](+) cluster, but different effects were observed when one-electron-reduced forms were incubated with HMBPP. Replacing His42 led to an increased K(M) value and a much lower catalytic efficiency, confirming the role of this residue in substrate binding. Replacing the His124 also resulted in a lower catalytic efficiency. In this case, however, the enzyme showed the loss of the [4Fe-4S](+) EPR signal upon addition of HMBPP without the subsequent formation of the FeS(A) signal. Instead, a radical-type signal was observed in some of the samples, indicating that this residue plays a role in the correct positioning of the substrate. The incorrect orientation in the mutant leads to the formation of substrate-based radicals instead of the cluster-bound intermediate complex FeS(A). Replacing the Glu126 also resulted in a lower catalytic efficiency, with yet a third type of EPR signal being detected upon incubation with HMBPP. (31)P and (2)H ENDOR measurements of the FeS(A) species incubated with regular and (2)H-C4-labeled HMBPP reveal that the substrate binds to the enzyme in the proximity of the active-site cluster with C4 adjacent to the site of linkage between the FeS cluster and HMBPP. Comparison of the spectroscopic properties of this intermediate to those of intermediates detected in (E)-4-hydroxy-3-methylbut-2-enyl diphosphate synthase and ferredoxin:thioredoxin reductase suggests that HMBPP binds to the FeS cluster via its hydroxyl group instead of a side-on binding as previously proposed for the species detected in the inactive Glu126 variant. Consequences for the IspH reaction mechanism are discussed.