UDP-GlcNAc:lysosomal enzyme N-acetylglucosamine-1-phosphotransferase is an ␣ 2  2 ␥ 2 hexamer that mediates the first step in the synthesis of the mannose 6-phosphate recognition marker on lysosomal acid hydrolases. Using a multifaceted approach, including analysis of acid hydrolase phosphorylation in mice and fibroblasts lacking the ␥ subunit along with kinetic studies of recombinant ␣ 2  2 ␥ 2 and ␣ 2  2 forms of the transferase, we have explored the function of the ␣/ and ␥ subunits. The findings demonstrate that the ␣/ subunits recognize the protein determinant of acid hydrolases in addition to mediating the catalytic function of the transferase. In mouse brain, the ␣/ subunits phosphorylate about one-third of the acid hydrolases at close to wild-type levels but require the ␥ subunit for optimal phosphorylation of the rest of the acid hydrolases. In addition to enhancing the activity of the ␣/ subunits toward a subset of the acid hydrolases, the ␥ subunit facilitates the addition of the second GlcNAc-P to high mannose oligosaccharides of these substrates. We postulate that the mannose 6-phosphate receptor homology domain of the ␥ subunit binds and presents the high mannose glycans of the acceptor to the ␣/ catalytic site in a favorable manner.In higher eukaryotes, newly synthesized acid hydrolases acquire mannose 6-phosphate (Man-6-P) 3 residues on their N-linked glycans as they traverse the Golgi (1). These residues serve as high affinity ligands for binding to Man-6-P receptors in the trans-Golgi network. The hydrolase-receptor complexes are then packaged into transport carriers for delivery to endosomes and lysosomes. The Man-6-P recognition marker is synthesized in two steps. First, UDP-GlcNAc:lysosomal enzyme N-acetylglucosamine-1-phosphotransferase (GlcNAc-1-phosphotransferase) binds to a conformation-dependent protein determinant on the acid hydrolase and transfers GlcNAc-1-P from UDP-GlcNAc to one or two of the mannose residues of the N-linked high mannose oligosaccharide. Second, N-acetylglucosamine 1-phosphodiester ␣-N-acetyglucosaminidase ("uncovering enzyme") excises the N-acetylglucosamine to generate the Man-6-P monoester.GlcNAc-1-phosphotransferase is a heterohexamer composed of three subunits (␣ 2  2 ␥ 2 ) (2). The ␣ and  subunits are encoded by a single gene GNPTAB, and the ␥ subunit is encoded by a separate gene GNPTG (3-5). Although it has been established that the ␣/ subunits contain the catalytic activity of the enzyme, the possible participation of these subunits in the recognition of the common protein determinant of the acid hydrolases has not been explored. Furthermore, the role(s) of the ␥ subunit is poorly understood. The initial insight into the function of the subunits came from studies of patients with the autosomal recessive lysosomal storage disorders termed mucolipidosis II (I-cell disease) and mucolipidosis III (pseudo-Hurler polydystrophy), the latter being the less severe of the two (6). These disorders arise from mutations in the genes encoding GlcNAc-1-phospho...