Formation of enzymatically active [NiFe] hydrogenases is dependent on a number of posttranslational steps, including metal attachment to a precursor of the catalytic subunit, truncation of a small C-terminal peptide from the precursor, and oligomerisation of the subunits. Two amino acid replacements were introduced by site-directed mutagenesis at the C-terminal proteolytic cleavage site of HoxH, the Ni-containing subunit of the cytoplasmic NAD-reducing hydrogenase of Alcaligenes eutrophus H16. Replacement of Ala465, the first residue of the 24-amino-acid cleaved polypeptide, by Pro yielded a form of HoxH that was blocked in C-terminal proteolysis. This HoxH subunit, although capable of binding Ni, was blocked in formation of a stable tetrameric holoenzyme. In the second mutant, the C-terminal extension of HoxH was eliminated by substituting the Ala codon for a translational stop codon. Although this mutant subunit was able to form the oligomeric holoenzyme, it was devoid of Ni. Both mutant proteins contained only traces of H2-activating functions. H2-dependent reduction of NAD and benzylviologen, and D2/H+-exchange activity were almost completely abolished, while the NADH oxidoreductase activity, mediated by the diaphorase moiety of the hydrogenase, was retained. These results allow the following conclusions: the C-terminal extension of HoxH is neccessary to direct specific Ni insertion into the hydrogenase; subunit assembly to the holoenzyme is not dependent on Ni insertion; and a precursor with the C-terminal peptide is not competent for assembly.