The beta-ketoacyl synthetase site of eukaryotic fatty acid synthetases is comprised in part of a pantetheinyl residue on one subunit juxtapositioned with a cysteinyl residue on the adjacent subunit. The present study has confirmed this arrangement and has identified 2 additional residues in the site. The active site residues were identified as summarized below. Sodium borohydride reduction of the keto derivatives of the dibromopropanone cross-linked residues yielded the alcohol derivatives which were amenable to isolation in good yields. The active enzyme yielded primarily a cysteinecysteamine derivative of 2-propanol, demonstrating that a cystyl and the pantetheinyl residues were cross-linked by dibromopropanone. However, in the cold-inactivated enzyme, the primary product of the cross-linking reaction was the dicystyl derivative. In addition, cross-linking between the cystyl and pantetheinyl residues, but not the two cystyl residues, resulted in the cross-linking of the two subunits. Therefore, it is proposed that there are two cystyl residues on one subunit juxtapositioned with the pantetheinyl residue on the adjacent subunit. The cystyl residues are highly reactive toward alkylating agents at pH 6.5, suggesting the presence of a cationic residue interacting with the thiolate anion. This proposal was supported using the bifunctional reagent o-phthalaldehyde which was found to cross-link the epsilon-amino group of lysine with the pantetheinyl-SH or the cystyl-SH in the beta-ketoacyl synthetase site to form a thioisoindole ring. The dialdehyde inhibited the enzyme by inactivating the beta-ketoacyl synthetase activity, and the inhibition could be prevented by malonyl-CoA and to a lesser extent by acetyl-CoA. Blocking the reactive thiol groups with dibromopropanone or 5,5'-dithiobis(2-nitrobenzoic acid) reduced the formation of the fluorescent thioisoindole ring. The close arrangement of a cystyl-SH, the pantetheinyl-SH, and the epsilon-amino group of lysine led us to propose that the positive epsilon-amino group may serve as an electron sink in a general acid-catalyzed decarboxylation reaction.