N-Methyltryptophan oxidase (MTOX) contains covalently bound FAD. N-Methyltryptophan binds in a cavity above the re-face of the flavin ring. Lys259 is located above the opposite, si-face. Replacement of Lys259 by Gln, Ala, or Met blocks (>95%) covalent flavin incorporation in vivo. The mutant apoproteins can be reconstituted with FAD. Apparent turnover rates (kcat app) of the reconstituted enzymes are about 2500-fold slower than wild-type MTOX. Wild-type MTOX forms a charge-transfer Eox*S complex with the redox-active anionic form of NMT. The Eox*S complex formed with Lys259Gln does not exhibit a charge-transfer band and is converted to a reduced enzyme*imine complex (EH2*P) at a 60-fold slower rate than wild-type MTOX. The mutant EH2*P complex contains the imine zwitterion and exhibits a charge-transfer band, a feature not observed with the wild-type EH2*P complex. Reaction of reduced Lys259Gln with oxygen is 2500-fold slower than reduced wild-type MTOX. The latter reaction is unaffected by the presence of bound product. Dissociation of the wild-type EH2*P complex is 80-fold slower than kcat. The mutant EH2*P complex dissociates 15-fold faster than kcat app. Consequently, EH2*P and free EH2 are the species that react with oxygen during turnover of wild-type and mutant enzyme, respectively. The results show that: (i) Lys259 is the site of oxygen activation in MTOX and also plays a role in holenzyme biosynthesis and N-methyltryptophan oxidation; (ii) MTOX contains separate active sites for N-methyltryptophan oxidation and oxygen reduction on opposite faces of the flavin ring.