Information regarding squalene synthases (SQSs) from prokaryotes is scarce. We aimed to characterize the SQS from Methylococcus capsulatus. We studied its reaction mechanism by kinetic analysis and evaluated the structure of the substrate/inhibitor-binding sites via homology modeling. The cloned M. capsulatus SQS was expressed in Escherichia coli and purified by nickel-nitrilotriacetic acid column chromatography. Interestingly, M. capsulatus SQS was water-soluble and did not require any detergent for its higher activity, unlike other SQSs studied previously; supplementation of any type of detergent inhibited enzyme activity. The specific activity and the kinetic values (K m and k cat ) for the substrate farnesyl diphosphate and NADPH are reported. The substrate analog farnesyl methylenediphosphonate showed potent inhibition toward the enzyme. We prepared the sitespecific mutants directed at potential active-site residues D (S2 site), which were assumed to be involved in the binding of the substrate farnesyl diphosphate through the Mg 2+ ion. We first demonstrated that the S1 site and the two basic residues (R55 and K212) were responsible for the binding of farnesyl diphosphate. Furthermore, we examined the catalytic roles of the highly conserved aromatic residues and demonstrated that the Y164 residue abstracts the proton of cation 5, which is produced during the first half-reaction (Scheme 1), to afford presqualene diphosphate, and that the W224 residue stabilizes the intermediary cation 5 via the cation-p interaction. Furthermore, we confirm for the first time that the F32 and the Y51 residues also stabilize the carbocation intermediate(s) generated during the second half-reaction.