Crude rat liver microsomal preparations catalyze a reduced vitamin K- and oxygen-dependent carboxylation of peptide-bound glutamyl residues to gamma-carboxyglutamyl residues. The same preparations convert reduced vitamin K to its 2,3-epoxide. The stoichiometry of this relationship has been investigated. At saturating concentrations of CO2, equal amounts of vitamin K 2,3-epoxide and gamma-carboxyglutamic acid are formed. As the CO2 concentration is lowered, this ratio shifts to a large excess of epoxide. Alterations in glutamyl substrate concentration or Mn2+ concentration cause equal alterations in both activities, while addition of KCN stimulated epoxidation and inhibited carboxylation. The release of 3H from a gamma-[3H]glutamyl substrate was tightly coupled to epoxide formation, and both of these activities were inhibited by glutathione peroxidase. These data are consistent with a reaction mechanism in which an oxygenated form of vitamin K activates the substrate glutamyl residue by hydrogen removal in a reaction that is coupled to vitamin K epoxide formation.