Further studies of mitochondrially bound hexokinase have been carried out in order to elucidate the mechanism first proposed to increase efficiency of oxidative phosphorylation by the acceptor effect (Bessman, S. P. (1954) in Fat Metabolism (Najjar, V., ed) pp. 133-137, Johns Hopkins Press, Baltimore). During isolation of mitochondria, Mg2+ caused increased quantities of hexokinase to be bound or retained. This effect is concentration-dependent, saturable, and cannot be explained by Mg2+-linked activation or stabilization. Rebinding of hexokinase to isolated mitochondria also shows a similar dependence on Mg2+. When added to a homogenate made without it, Mg2+ could not bind the same amount of hexokinase to the mitochondria as could be observed when Mg2+ had been included in the homogenizing medium from the start. Using mitochondria prepared with Mg2+ in order to bind hexokinase to the largest extent possible, we have demonstrated that as in the case of mitochondrial creatine phosphokinase, a compartment exists that permits more efficient production of glucose 6-phosphate during mitochondrial respiration--the hexokinase acceptor effect. This effect probably results from a favorable positioning of the active site of hexokinase, perhaps within the intermembrane space, providing a diffusion-favorable situation. Thus, newly synthesized ATP transported through the inner membrane supplies substrate to hexokinase with greater efficiency than that of ATP which must pass through the outer membrane by diffusion from the medium. These observations lend support to proposals that in vivo modulation of the soluble particulate distribution of hexokinase by hormones or by metabolites may be physiologically necessary and important.