The acid precipitate of the ubiquitin activating enzyme after reaction with ATP and ubiquitin contains one enzyme equivalent of ubiquitin adenylate in which the carboxyl-terminal glycine of ubiquitin and AMP are in an acyl-phosphate linkage. The recovered ubiquitin adenylate has the catalytic properties proposed for it as a reaction intermediate. Thus, upon reaction with fresh enzyme in the absence of Mg2+ or ATP, the product complex, E-ubiquitin . AMP-ubiquitin, is formed. This complex is capable of generating ubiquitin-protein isopeptide derivatives when added to a reticulocyte fraction that catalyzes protein conjugation. This reproduces the effect previously shown to require ubiquitin, ATP, and Mg2+. In the presence of activating enzyme, ubiquitin adenylate is converted to ATP and free ubiquitin in a step requiring PPi and Mg2+. On the basis of studies of [32P]PPi/nucleoside triphosphate exchange, the activating enzyme could be used to generate 2'-deoxy-AMP-, 2'-deoxy-IMP-, and 2'-deoxy-GMP-ubiquitin but not pyrimidine nucleotide-ubiquitin derivatives. The enzyme shows a modest preference for the pro-S diastereomers of adenosine 5'-O-(1-thiotriphosphate) and adenosine 5'-O-(2-thiotriphosphate). Inorganic phosphate, arsenate, methyl phosphate, and tripolyphosphate, but not nucleoside triphosphates, can serve as alternate substrates in place of PPi in the reverse of ubiquitin adenylate formation. Therefore, the enzyme catalyzes the unusual reaction ATP + Pi in equilibrium ADP + PPi in the presence of ubiquitin.