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The cytochrome P-450 PikC from Streptomyces venezuelae exhibits significant substrate tolerance and performs multiple hydroxylation reactions on structurally variant macrolides bearing the deoxyamino sugar desosamine. In previously determined co-crystal structures (Sherman, D. H., Li, S., Yermalitskaya, L. V., Kim, Y., Smith, J. A., Waterman, M. R., and Podust, L. M. (2006) J. Biol. Chem. 281, 26289-26297), the desosamine moiety of the native substrates YC-17 and narbomycin is bound in two distinct buried and surface-exposed binding pockets, mediated by specific interactions between the protonated dimethylamino group and the acidic amino acid residues Asp(50), Glu(85), and Glu(94). Although the Glu(85) and Glu(94) negative charges are essential for maximal catalytic activity of native enzyme, elimination of the surface-exposed negative charge at Asp(50) results in significantly enhanced catalytic activity. Nevertheless, the D50N substitution could not rescue catalytic activity of PikC(E94Q) based on lack of activity in the corresponding double mutant PikC(D50N/E94Q). To address the specific role for each desosamine-binding pocket, we analyzed the x-ray structures of the PikC(D50N) mutant co-crystallized with narbomycin (1.85A resolution) and YC-17 (3.2A resolution). In PikC(D50N), the desosamine moiety of both YC-17 and narbomycin was bound in a catalytically productive "buried site." This finding suggested a two-step substrate binding mechanism, whereby desosamine is recognized in the two subsites to allow the macrolide substrate to sequentially progress toward a catalytically favorable orientation. Collectively, the binding, mutagenesis, kinetic, and x-ray structural data suggest that enhancement of the catalytic activity of PikC(D50N) is due to the facilitated relocation of substrate to the buried site, which has higher binding affinity, as opposed to dissociation in solution from the transient "surface-exposed site."