Porphobilinogen deaminase (PBGD) catalyses the polymerization of four molecules of porphobilinogen to form the 1‐hydroxymethylbilane, preuroporphyrinogen, a key intermediate in the biosynthesis of tetrapyrroles. The three‐dimensional structure of wild‐type PBGD from Escherichia coli has been determined by multiple isomorphous replacement and refined to a crystallographic R‐factor of 0.188 at 1.76 Å resolution. The polypeptide chain of PBGD is folded into three α/β domains. Domains 1 and 2 have a similar overall topology, based on a five‐stranded, mixed β‐sheet. These two domains, which are linked by two hinge segments but otherwise make few direct interactions, form an extensive active site cleft at their interface. Domain 3, an open‐faced, anti‐parallel sheet of three strands, interacts approximately equally with the other two domains. The dipyrromethane cofactor is covalently attached to a cysteine side‐chain borne on a flexible loop of domain 3. The cofactor serves as a primer for the assembly of the tetrapyrrole product and is held within the active site cleft by hydrogen‐bonds and salt‐bridges that are formed between its acetate and propionate side‐groups and the polypeptide chain. The structure of a variant of PBGD, in which the methionines have been replaced with selenomethionines, has also been determined. The cofactor, in the native and functional form of the enzyme, adopts a conformation in which the second pyrrole ring (C2) occupies an internal position in the active site cleft. On oxidation, however, this C2 ring of the cofactor adopts a more external position that may correspond approximately to the site of substrate binding and polypyrrole chain elongation. The side‐chain of Asp84 hydrogen‐bonds the hydrogen atoms of both cofactor pyrrole nitrogens and also potentially the hydrogen atom of the pyrrole nitrogen of the porphobilinogen molecule bound to the proposed substrate binding site. This group has a key catalytic role, possibly in stabilizing the positive charges that develop on the pyrrole nitrogens during the ring‐coupling reactions. Possible mechanisms for the processive elongation of the polypyrrole chain involve: accommodation of the elongating chain within the active site cleft, coupled with shifts in the relative positions of domains 1 and 2 to carry the terminal ring into the appropriate position at the catalytic site; or sequential translocation of the elongating polypyrrole chain, attached to the cofactor on domain 3, through the active site cleft by the progressive movement of domain 3 with respect to domains 1 and 2. Other mechanisms are considered although the amino acid sequence comparisons between PBGDs from all species suggest they share the same three‐dimensional structure and mechanism of activity. © 1996 Wiley‐Liss, Inc.