In eukaryotes, sulfate esters are degraded by sulfatases, which possess a unique Calpha-formylglycine residue in their active site. The defect in post-translational formation of the Calpha-formylglycine residue causes a severe lysosomal storage disorder in humans. Recently, FGE (formylglycine-generating enzyme) has been identified as the protein required for this specific modification. Using sequence comparisons, a protein homologous to FGE was found and denoted pFGE (paralog of FGE). pFGE binds a sulfatase-derived peptide bearing the FGE recognition motif, but it lacks formylglycine-generating activity. Both proteins belong to a large family of pro- and eukaryotic proteins containing the DUF323 domain, a formylglycine-generating enzyme domain of unknown three-dimensional structure. We have crystallized the glycosylated human pFGE and determined its crystal structure at a resolution of 1.86 A. The structure reveals a novel fold, which we denote the FGE fold and which therefore serves as a paradigm for the DUF323 domain. It is characterized by an asymmetric partitioning of secondary structure elements and is stabilized by two calcium cations. A deep cleft on the surface of pFGE most likely represents the sulfatase polypeptide binding site. The asymmetric unit of the pFGE crystal contains a homodimer. The putative peptide binding site is buried between the monomers, indicating a biological significance of the dimer. The structure suggests the capability of pFGE to form a heterodimer with FGE.