UDP-2,3-diacylglucosamine hydrolase is believed to catalyze the fourth step of lipid A biosynthesis in Escherichia coli. This reaction involves pyrophosphate bond hydrolysis of the precursor UDP-2,3-diacylglucosamine to yield 2,3-diacylglucosamine 1-phosphate and UMP. To identify the gene encoding this hydrolase, E. coli lysates generated with individual lambda clones of the ordered Kohara library were assayed for overexpression of the enzyme. The sequence of lambda clone 157[6E7], promoting overproduction of hydrolase activity, was examined for genes encoding hypothetical proteins of unknown function. The amino acid sequence of one such open reading frame, ybbF, is 50.5% identical to a Haemophilus influenzae hypothetical protein and is also conserved in most other Gram-negative organisms, but is absent in Gram-positives. Cell extracts prepared from cells overexpressing ybbF behind the T7lac promoter have approximately 540 times more hydrolase activity than cells with vector alone. YbbF was purified to approximately 60% homogeneity, and its catalytic properties were examined. Enzymatic activity is maximal at pH 8 and is inhibited by 0.01% (or more) Triton X-100. The apparent K(m) for UDP-2,3-diacylglucosamine is 62 microm. YbbF requires a diacylated substrate and does not cleave CDP-diacylglycerol. (31)P NMR studies of the UMP product generated from UDP-2,3-diacylglucosamine in the presence of 40% H(2)180 show that the enzyme attacks the alpha-phosphate group of the UDP moiety. Because ybbF encodes the specific UDP-2,3-diacylglucosamine hydrolase involved in lipid A biosynthesis, it is now designated lpxH.