The enzyme encoded by Escherichia coli purU has been overproduced, purified, and characterized. The enzyme catalyzes the hydrolysis of 10-formyltetrahydrofolate (formyl-FH4) to FH4 and formate. Formyl-FH4 hydrolase thus generates the formate that is used by purT-encoded 5'-phosphoribosylglycinamide transformylase for step three of de novo purine nucleotide synthesis. Formyl-FH4 hydrolase, a hexamer with 32-kDa subunits, is activated by methionine and inhibited by glycine. Heterotropic cooperativity is observed for activation by methionine in the presence of glycine and for inhibition by glycine in the presence of methionine. These results, along with previous mutant analyses, lead to the conclusion formyl-FH4 hydrolase is a regulatory enzyme whose main function is to balance the pools of FH4 and C1-FH4 in response to changing growth conditions. The enzyme uses methionine and glycine to sense the pools of C1-FH4 and FH4, respectively.