Phenylalanine hydroxylase (PAH) is a tetrahydrobiopterin (BH(4))-dependent enzyme that catalyzes the hydroxylation of l-Phe to l-Tyr. The non-heme iron in the enzyme (Fe(III) as isolated) is 6-coordinated to a 2-His-1-carboxylate motif and three water molecules (wat1, wat2 and wat3). Tyr325 is at the second coordination sphere, hydrogen-bonded to water (wat1). We prepared and expressed mutants with Leu, Ala, Ser and Phe at this position. Only Y325L and the conservative mutation Y325F resulted in stable enzymes, but the mutant Y325F has been found to be post-translationally hydroxylated and to revert back to wild-type PAH [S.D. Kinzie, M. Thevis, K. Ngo, J. Whitelegge, J.A. Loo, M.M. Abu-Omar, J. Am. Chem. Soc. 125 (2003) 4710-4711], being inadequate to investigate the early inferred functional role of Tyr325. On the other hand, compared to wild-type PAH, Y325L shows reduced specific activity, decreased coupling efficiency and decreased iron content. The mutant also reveals a very high affinity for l-Phe and BH(4) and does not manifest positive cooperativity for the substrate. All together, our results support that the mutation Y325L causes the removal or increased delocalization of the iron-ligated wat1 and, in turn, a less tight binding of the metal. Tyr325 thus appears to have an important role ensuring stoichiometric binding of iron, correct geometry of the complexes with substrate and cofactor and, consequently, a right coupling efficiency of the PAH reaction. In addition, the residue appears to be important for the correct cooperative regulation by l-Phe.