Recently a newly discovered pyridine nucleotide-disulfide oxidoreductase was reported to be essential for the degradation of epoxyalkanes by the Xanthobacter Py2 [Swaving, J., De Bont, J. A. M., Westphal, A. & De Kok, A. (1996) J. Bacteriol. 178, 6644-6646]. The disulfide oxidoreductase has now been purified from propene-grown Xanthobacter Py2. This enzyme (component II) is a NADPH-dependent FAD-containing homodimeric protein. The physiological substrate for this enzyme is unknown. The enzyme was active with the following dithiol substrates in decreasing order: 1,3-propanedithiol, reduced lipoamide and dithiothreitol, and inactive with glutathione and monothiols. In the reversed direction, only activity with 5,5'-dithiobis(2-nitrobenzoate) could be measured. Compared with other disulfide reductases it has a high activity with 5,5'-dithiobis(2-nitrobenzoate) and a low diaphorase and oxidase activity. Steady-state kinetic studies at pH 8.5 with 1,3-propanedithiol show that the enzyme operates by a ternary complex mechanism in the direction of NADP+ reduction. Anaerobic incubation of the enzyme with 1,3-propanedithiol resulted in slow reduction of the enzyme to yield the thiolate-FAD charge-transfer complex, the rate depending on the pH. At pH 7, where reduction was not detectable within 2 h, rapid mixing of NADP+ with the enzyme-propanedithiol mixture resulted in the formation of a complex between the reduced enzyme and NADP+ within the dead time of the instrument (5.6 ms). This is followed by slow formation of NADPH, concomitant with the appearance of the flavin C(4a)-thiol adduct, as judged from the spectral changes. This suggests that the rate-limiting step is the transfer of a hydride ion from the half-reduced enzyme to NADP+. Stopped-flow experiments involving reduction by NADPH show a biphasic behavior. The rapid formation (k(obs) = 40 s(-1)) of a transient intermediate with little absorption decrease at 460 nm and long wavelength absorption was followed by the slow formation (k(obs) = 4 s(-1)) of a species characterized as the thiolate-FAD charge-transfer complex with bound NADP+. Some formation of the FAD C(4a)-thiol adduct was also observed. Photoreduction in the presence of deazaflavin results in rapid bleaching at 450 nm, followed by the slow formation of a stable semiquinone. Full reduction could not be achieved, either by photoreduction or with NADPH, and was incomplete even with dithionite or NADPH in the presence of arsenite. The results indicate a low redox potential of the FAD and a slow rate of electron transfer from the pyridine nucleotide to the redox active disulfide and vice versa. From a sequence alignment with other disulfide reductases, it appears that the active site His-Glu diad is absent in this enzyme. The kinetic and spectral features described above will be discussed in this context.