The Golgi enzyme UDP-GlcNAc:lysosomal enzyme N-acetylglucosamine-1-phosphotransferase (GlcNAc-1-phosphotransferase), an ␣ 2  2 ␥ 2 hexamer, mediates the initial step in the addition of the mannose 6-phosphate targeting signal on newly synthesized lysosomal enzymes. This tag serves to direct the lysosomal enzymes to lysosomes. A key property of GlcNAc-1-phosphotransferase is its unique ability to distinguish the 60 or so lysosomal enzymes from the numerous nonlysosomal glycoproteins with identical Asn-linked glycans. In this study, we demonstrate that the two Notch repeat modules and the DNA methyltransferase-associated protein interaction domain of the ␣ subunit are key components of this recognition process. Importantly, different combinations of these domains are involved in binding to individual lysosomal enzymes. This study also identifies the ␥-binding site on the ␣ subunit and demonstrates that in the majority of instances the mannose 6-phosphate receptor homology domain of the ␥ subunit is required for optimal phosphorylation. These findings serve to explain how GlcNAc-1-phosphotransferase recognizes a large number of proteins that lack a common structural motif.Correct targeting of newly synthesized acid hydrolases to lysosomes is essential for this organelle to maintain its function of degrading intracellular and endocytosed material. In higher eukaryotes, this process is mediated by the mannose 6-phosphate (Man-6-P) 5 recognition system whereby the newly synthesized acid hydrolases acquire Man-6-P residues in the Golgi that serve as high affinity ligands for binding to Man-6-P receptors (MPRs) in the trans-Golgi network and subsequent transport to the endo-lysosomal system (1). The initial and most critical step in the generation of the Man-6-P tag is mediated by the Golgi enzyme UDP-GlcNAc:lysosomal enzyme N-acetylglucosamine-1-phosphotransferase (GlcNAc-1-phosphotransferase). This enzyme binds selectively to conformation-dependent protein determinants in the 60 or so lysosomal acid hydrolases and transfers GlcNAc-1-P from UDP-GlcNAc to mannose residues on high mannose-type N-linked glycans of the hydrolases (2). The GlcNAc is subsequently excised by a second Golgi enzyme ("uncovering enzyme") to generate the high affinity Man-6-P ligand (3).GlcNAc-1-phosphotransferase is an ␣ 2  2 ␥ 2 hexamer that is encoded by two genes (4 -7). The GNPTAB gene encodes the ␣ and  subunits, whereas the GNPTG gene encodes the ␥ subunit. Enzyme kinetic studies have indicated that the ␣ and  subunits specifically bind lysosomal acid hydrolases and mediate the catalytic function of the enzyme (8, 9). The ␥ subunit enhances the rate of GlcNAc-P transfer to a subset of the acid hydrolases without substantially altering the binding to these acceptors. Consistent with this, analysis of the level of mannose phosphorylation of the acid hydrolases in the brain of mice lacking the ␥ subunit, as estimated by the extent of binding to a cation-independent (CI)-MPR affinity resin, indicated that about one-third of the acid hydrol...