Glycine is converted to carbon dioxide and an intermediate attached to H-protein in the P-protein-catalyzed partial reaction of the glycine cleavage reaction (Fujiwara, K., and Motokawa, Y. (1983) J. Biol. Chem. 258, 8156-8162). The studies presented in this communication indicate that the amino group of glycine is retained in the intermediate and released as ammonia in the second partial reaction catalyzed by T-protein. The formation of ammonia accompanies the stoichiometric formation of 5,10-methylenetetrahydrofolate from the methylene carbon of glycine and tetrahydrofolate. Kinetic studies show that the reaction proceeds through a sequential mechanism. Km values for the intermediate complex and tetrahydrofolate are 2.2 and 50 microM, respectively. In the absence of tetrahydrofolate, T-protein catalyzes the stoichiometric formation of ammonia and formaldehyde from the intermediate although the velocity is extremely low. Km value for the intermediate complex in the absence of tetrahydrofolate is 10.3 microM, about 4-fold higher than the value in the presence of tetrahydrofolate. The addition of tetrahydrofolate increased the rate about 2400-fold. The modification of the free lipoyl sulfhydryl group with N-ethylmaleimide caused the intermediate complex inactive. The lipoyl sulfhydryl group seems to be essential for both P-protein- and T-protein-catalyzed partial reactions.