The formation of the dipyrromethane cofactor of Escherichia coli porphobilinogen deaminase was shown to depend on the presence of 5-aminolevulinic acid. A hemA- mutant formed inactive deaminase when grown in the absence of 5-aminolevulinic acid since this strain was unable to biosynthesize the dipyrromethane cofactor. The mutant formed normal levels of deaminase, however, when grown in the presence of 5-aminolevulinic acid. Porphobilinogen, the substrate, interacts with the free alpha-position of the dipyrromethane cofactor to give stable enzyme-intermediate complexes. Experiments with regiospecifically labeled intermediate complexes have shown that, in the absence of further substrate molecules, the complexes are interconvertible by the exchange of the terminal pyrrole ring of each complex. The formation of enzyme-intermediate complexes is accompanied by the exposure of a cysteine residue, suggesting that substantial conformational changes occur on binding substrate. Specific labeling of the dipyrromethane cofactor by growth of the E. coli in the presence of 5-amino[5-14C]levulinic acid has confirmed that the cofactor is not subject to catalytic turnover. Experiments with the alpha-substituted substrate analogue alpha-bromoporphobilinogen have provided further evidence that the cofactor is responsible for the covalent binding of the substrate at the catalytic site. On the basis of these cumulative findings, it has been possible to construct a mechanistic scheme for the deaminase reaction involving a single catalytic site which is able to catalyze the addition or removal of either NH3 or H2O. The role of the cofactor both as a primer and as a means for regulating the number of substrates bound in each catalytic cycle is discussed.