Mycothiol is a novel thiol produced only by actinomycetes and is the major low-molecular-weight thiol in mycobacteria. Mycothiol was previously shown to be synthesized from 1-D-myo-inosityl-2-amino-2-deoxy-␣-Dglucopyranoside by ligation with cysteine followed by acetylation. A novel mycothiol-dependent detoxification enzyme, mycothiol conjugate amidase, was recently identified in Mycobacterium smegmatis and shown to have a homolog, Rv1082, in Mycobacterium tuberculosis. In the present study we found that a protein encoded by the M. tuberculosis open reading frame Rv1170, a homolog of Rv1082, possesses weak mycothiol conjugate amidase activity but shows substantial deacetylation activity with 1-D-myo-inosityl-2-acetamido-2-deoxy-␣-D-glucopyranoside (GlcNAc-Ins), a hypothetical mycothiol biosynthetic precursor. The availability of this protein enabled us to develop an assay for GlcNAc-Ins, which was used to demonstrate that GlcNAc-Ins is present in M. smegmatis at a level about twice that of mycothiol. It was shown that GlcNAc-Ins is absent in mycothiol-deficient mutant strain 49 of M. smegmatis and that this strain can concentrate GlcNAc-Ins from the medium and convert it to mycothiol. This demonstrates that GlcNAc-Ins is a key intermediate in the pathway of mycothiol biosynthesis. Assignment of Rv1170 as the gene coding the deacetylase in the M. tuberculosis genome represents the first identification of a gene of the mycothiol biosynthesis pathway. The presence of a large cellular pool of substrate for this enzyme suggests that it may be important in regulating mycothiol biosynthesis.Most gram-positive bacteria, including many strict aerobes, do not produce glutathione (7, 13), a key component of cellular mechanisms for protection against oxygen toxicity (5). In the search for other thiols in these organisms that might function like glutathione, a major thiol in streptomycetes was discovered (14) and later identified (12,19,21) as a novel conjugate of N-acetylcysteine (AcCys) and 1-D-myo-inosityl-2-amino-2-deoxy-␣-D-glucopyranoside (GlcN-Ins) producing mycothiol (MSH or AcCys-GlcN-Ins). Bornemann et al. (3) showed that chemically synthesized GlcN-Ins could be converted to CysGlcN-Ins and MSH by Mycobacterium smegmatis cell extracts in the presence of ATP, Mg 2ϩ , Cys, and acetate or acetyl coenzyme A (acetyl-CoA). They proposed that the final steps of MSH biosynthesis involve ATP-dependent ligation of Cys with GlcN-Ins, followed by acetylation via an acetyltransferase reaction involving acetyl-CoA. Measurements of GlcN-Ins and Cys-GlcN-Ins levels in M. smegmatis (1) and isolation of mutants defective in GlcN-Ins or Cys-GlcN-Ins production support the existence of this pathway (15).The earlier studies left undefined the biochemical reactions involved in GlcN-Ins formation. By analogy with the established biochemistry for production of the glycosylphosphatidylinositol (GPI) anchor, which contains as a component an isomer of GlcN-Ins with an ␣(1-6) linkage, one might expect that GlcN-Ins is produced by deacetylati...