Endogenous fatty acids are synthesized in all organisms in a pathway catalyzed by the fatty acid synthase complex. In bacteria, where the fatty acids are used primarily for incorporation into components of cell membranes, fatty acid synthase is made up of several independent cytoplasmic enzymes, each catalyzing one specific reaction. The initiation of the elongation step, which extends the length of the growing acyl chain by two carbons, requires the transfer of the malonyl moiety from malonyl-CoA onto the acyl carrier protein. We report here the crystal structure (refined at 1.5-A resolution to an R factor of 0.19) of the malonyl-CoA specific transferase from Escherichia coli. The protein has an alpha/beta type architecture, but its fold is unique. The active site inferred from the location of the catalytic Ser-92 contains a typical nucleophilic elbow as observed in alpha/beta hydrolases. Serine 92 is hydrogen bonded to His-201 in a fashion similar to various serine hydrolases. However, instead of a carboxyl acid typically found in catalytic triads, the main chain carbonyl of Gln-250 serves as a hydrogen bond acceptor in an interaction with His-201. Two other residues, Arg-117 and Glu-11, are also located in the active site, although their function is not clear.