C␣-formylglycine (FGly) is the catalytic residue in the active site of sulfatases. In eukaryotes, it is generated in the endoplasmic reticulum by post-translational modification of a conserved cysteine residue. The FGly-generating enzyme (FGE), performing this modification, is an endoplasmic reticulum-resident enzyme that upon overexpression is secreted. Recombinant FGE was purified from cells and secretions to homogeneity. Intracellular FGE contains a high mannose type N-glycan, which is processed to the complex type in secreted FGE. Secreted FGE shows partial N-terminal trimming up to residue 73 without loosing catalytic activity. FGE is a calciumbinding protein containing an N-terminal (residues 86 -168) and a C-terminal (residues 178 -374) protease-resistant domain. The latter is stabilized by three disulfide bridges arranged in a clamp-like manner, which links the third to the eighth, the fourth to the seventh, and the fifth to the sixth cysteine residue. The innermost cysteine pair is partially reduced. The first two cysteine residues are located in the sequence preceding the Nterminal protease-resistant domain. They can form intramolecular or intermolecular disulfide bonds, the latter stabilizing homodimers. The C-terminal domain comprises the substrate binding site, as evidenced by yeast two-hybrid interaction assays and photocrosslinking of a substrate peptide to proline 182. Peptides derived from all known human sulfatases served as substrates for purified FGE indicating that FGE is sufficient to modify all sulfatases of the same species.