Sucrose isomerase NX-5 from Erwiniarhapontici efficiently catalyzes the isomerization of sucrose to isomaltulose (main product) and trehalulose (by-product). To investigate the molecular mechanism controlling sucrose isomer formation, we determined the crystal structures of native NX-5 and its mutant complexes E295Q/sucrose and D241A/glucose at 1.70 Å, 1.70 Å and 2.00 Å, respectively. The overall structure and active site architecture of NX-5 resemble those of other reported sucrose isomerases. Strikingly, the substrate binding mode of NX-5 is also similar to that of trehalulose synthase from Pseudomonasmesoacidophila MX-45 (MutB). Detailed structural analysis revealed the catalytic RXDRX motif and the adjacent 10-residue loop of NX-5 and isomaltulose synthase PalI from Klebsiella sp. LX3 adopt a distinct orientation from those of trehalulose synthases. Mutations of the loop region of NX-5 resulted in significant changes of the product ratio between isomaltulose and trehalulose. The molecular dynamics simulation data supported the product specificity of NX-5 towards isomaltulose and the role of the loop(330-339) in NX-5 catalysis. This work should prove useful for the engineering of sucrose isomerase for industrial carbohydrate biotransformations.