Yeast cell wall remodeling is controlled by the equilibrium between glycoside hydrolases, glycosyltransferases, and transglycosylases. Family 72 glycoside hydrolases (GH72) are ubiquitous in fungal organisms and are known to possess significant transglycosylase activity, producing elongated (1-3) glucan chains. However, the molecular mechanisms that control the balance between hydrolysis and transglycosylation in these enzymes are not understood. Here we present the first crystal structure of a glucan transglycosylase, Saccharomyces cerevisiae Gas2 (ScGas2), revealing a multidomain fold, with a (␣) 8 catalytic core and a separate glucan binding domain with an elongated, conserved glucan binding groove. Structures of ScGas2 complexes with different -glucan substrate/product oligosaccharides provide "snapshots" of substrate binding and hydrolysis/transglycosylation giving the first insights into the mechanisms these enzymes employ to drive (1-3) glucan elongation. Together with mutagenesis and analysis of reaction products, the structures suggest a "base occlusion" mechanism through which these enzymes protect the covalent protein-enzyme intermediate from a water nucleophile, thus controlling the balance between hydrolysis and transglycosylation and driving the elongation of (1-3) glucan chains in the yeast cell wall.The cell wall of fungal organisms is a dynamic structure, providing protection against hostile environments, yet also harboring many hydrolytic and toxic molecules required for the fungus to invade its ecological niche (1). Polysaccharides account for over 90% of the cell wall. The central skeletal component of the cell wall common to the vast majority of fungal species is a branched core of (1,3) glucan, linked to chitin via a (1,4) linkage (1). Interchain (1,6) glucosidic linkages account for 3 and 4% of the total glucan linkages in Saccharomyces cerevisiae and Aspergillus fumigatus, respectively (2-4). This core is embedded in a complex of amorphous proteins and/or polysaccharide whose composition is highly species-dependent. The core (1,3) glucan is subjected to continuous synthetic elaboration, degradation, and remodeling by a large arsenal of enzymes, whose activities must be appropriately balanced to provide the cell wall with adequate elasticity to allow growth, budding, or branching and yet sufficient strength to guard against cell lysis (1).Glucan synthase is a protein complex located at the plasma membrane, synthesizing (1,3) glucan from UDP-glucose (65-90% of the total glucan). In cell wall remodeling, glycoside hydrolases and glycosyltransferases/transglycosylases play a crucial role (1, 5). Pure glycoside hydrolases degrade glycans mainly to regulate the plasticity of the cell wall under different circumstances, such as cell division, cell separation, and sporulation (5), whereas glycoside hydrolases with significant transglycosylase activity are capable of forming new glycosidic bonds between oligosaccharides, generating longer or branched polymers. Previous studies have shown...