Dermatan sulfate is a highly sulfated polysaccharide and has a variety of biological functions in development and disease. Iduronic acid domains in dermatan sulfate, which are formed by the action of two DS-epimerases, have a key role in mediating these functions. We have identified the catalytic site and three putative catalytic residues in DS-epimerase 1, His-205, Tyr-261, and His-450, by tertiary structure modeling and amino acid conservation to heparinase II. These residues were systematically mutated to alanine or more conserved residues, which resulted in complete loss of epimerase activity. Based on these data and the close relationship between lyase and epimerase reactions, we propose a model where His-450 functions as a general base abstracting the C5 proton from glucuronic acid. Subsequent cleavage of the glycosidic linkage by Tyr-261 generates a 4,5-unsaturated hexuronic intermediate, which is protonated at the C5 carbon by His-205 from the side of the sugar plane opposite to the side of previous proton abstraction. Concomitant recreation of the glycosidic linkage ends the reaction, generating iduronic acid. In addition, we show that proper N-glycosylation of DS-epimerase 1 is required for enzyme activity. This study represents the first description of the structural basis for epimerization by a glycosaminoglycan epimerase.Chondroitin/dermatan sulfate proteoglycans are ubiquitous components of extracellular matrices and have been implicated in several biological processes, such as cell proliferation, cell signaling, wound healing, blood coagulation and neurite outgrowth (1, 2). Chondroitin/dermatan sulfate glycosaminoglycan chains consist of a repeated disaccharide unit of GlcA and GalNAc, where in DS, 3 in addition to -D-GlcA, its epimer ␣-Liduronic acid (IdoA) can be found to various extents. The chain can also be modified by sulfation of position 2 of GlcA/IdoA and of positions 4 and 6 of GalNAc by sulfotransferases that are specific for each position (3). The degree of epimerization and sulfation and the position of the sulfate groups vary during development and among tissues and are regulated by growth factors (4).The presence of IdoA is critical in mediating several biological functions of dermatan sulfate, such as the binding to hepatocyte growth factor and heparin cofactor II (1). IdoA is also required for self-interaction of DS chains, and the self-interactions of decorin side chains are believed to be important in collagen fibrillogenesis (5, 6). This can be explained by the fact that IdoA increases the glycosaminoglycan chains conformational flexibility, which facilitates interactions (7).Epimerization of GlcA into IdoA in dermatan sulfate is catalyzed by the DS-epimerase, which we recently purified and cloned (8). Based on sequence similarity with the DS-epimerase, a second epimerase has also been identified, and its activity has been established. 4 Here, the two enzymes are referred to as DS-epimerase 1 (encoded by the DSE gene) and DS-epimerase 2 (encoded by the DSEL gene), respectively...