To explore the roles of three aspartate residues, Asp88, Asp130, and Asp274, found in the proposed inducer binding site of lac repressor [Sams, C. F., Vyas, N. K., Quiocho, F. A., & Matthews, K. S. (1984) Nature 310, 429-430], each site was substituted with alanine, glutamate, lysine, or asparagine by site-specific mutagenesis. The mutations at the Asp88 site resulted in a 5-13-fold decrease in inducer binding affinity, largely due to an increase in the inducer dissociation rate constants for these mutants. In addition, the mutant proteins Asp88-->Ala and Asp88-->Lys exhibited altered allosteric behavior for inducer binding. These data conflict with the original hypothesis placing Asp88 in the inducer binding site, but are in agreement with a recent model that places this amino acid close to the subunit interface involved in cooperativity associated with inducer binding [Nichols, J. C., Vyas, N. K., Quiocho, F. A., & Matthews, K. S. (1993) J. Biol. Chem. 268, 17602-17612; Chen, J., & Matthews, K. S. (1992) J. Biol. Chem. 267, 13843-13850]. Substitution at Asp130 did not alter the inducer binding affinity nor other binding activities. Thus, this amino acid is not crucial in the binding to beta-substituted monosaccharides or in protein function. In stark contrast, all mutant proteins with substitutions at the Asp274 site exhibited no detectable inducer binding. With the exception of Asp274-->Lys, the structures of these mutant proteins appear to be similar to wild-type. The data demonstrate that Asp274 plays a crucial role in inducer binding of this transcriptional regulator.