Both the highly conserved Arg363 and Arg372 residues of Escherichia coli serine hydroxymethyltransferase were changed to alanine and lysine residues. Each of the four mutant proteins were purified to homogeneity and characterized with respect to spectral properties of the enzyme-bound pyridoxal phosphate and kinetic properties with substrates and substrate analogs. The R372A and R372 K mutant enzymes exhibited spectra and kinetic properties close to those of the wild-type enzyme. The R363 K mutant enzyme exhibited only 0.03% of the catalytic activity of the wild-type enzyme and a 15-fold reduction in affinity for glycine and serine. The R363A mutant enzyme did not bind serine and glycine and showed no activity with serine as the substrate. Both R363 K and R363A enzymes bound amino acid esters at the active site and catalyzed the retro-aldol cleavage of serine ethyl ester and serinamide. The catalytic activity of the R363 K and R363A enzymes with the serine ethyl ester were about 0.006% and 0.1% of wild-type enzyme activity with serine, respectively. The R363A mutant enzyme catalyzed the half transamination of D-alanine methyl ester and L-alanine methyl ester at rates similar to the rates of transamination of D-alanine and L-alanine by the wild-type enzyme. The results are interpreted to show that R363 is the binding site of the amino acid substrate carboxyl group and that forming an ion pair between R363 and the substrate carboxyl group is an important feature in catalysis by serine hydroxymethyltransferase. Evidence is also provided that R363 may play a role in the substrate-induced open to closed conformational change of the active site.