Epoxypropane isomerase from Xanthobacter Py2 has been resolved into at least two components (A and B) by ion-exchange chromatography. Both components were required for the degradation of epoxypropane and were purified further. Component A was apparently homohexameric with a subunit M(r) of about 44,000, and possessed NAD(+)-dependent dihydrolipoamide dehydrogenase activity and lipoamide reductase activity. It was sensitive to inhibition by o-phenanthroline and the thiol-specific reagents N-ethylmaleimide(NEM)and p-chloromercuribenzoate. Component B was homodimeric with a subunit M(r), of 62,170 and contained 2 mol.mol-1 FAD. It had an NADPH-dependent lipoamide reductase activity which was sensitive to NEM and p-chloromercuribenzoate. The N-terminal amino acid sequences and monomer sizes of components A and B correspond to those of ORF1 and ORF3 respectively (ORF = open reading frame) of a recently published sequence of a clone which complements mutants unable to degrade epoxypropane. NADPH was found to replace the need for a low-M(r), fraction in epoxypropane degradation assays containing components A and B and NAD+. The predicted amino acid sequence of component A (ORF1) has been analysed and shown to contain a potential ADP binding site near the N-terminus and putative cofactor binding domain near the C-terminus, with sequence similarity to the biotinyl and lipoyl binding domains of biotin-dependent carboxylases and 2-oxoacid dehydrogenases respectively. A reaction mechanism for epoxypropane degradation, incorporating recent evidence for combined isomerization and carboxylation to acetoacetate, is discussed.