The crystal structure of the microbial transglutaminase (MTGase) zymogen from Streptomyces mobaraense has been determined at 1.9-Å resolution using the molecular replacement method based on the crystal structure of the mature MTGase. The overall structure of this zymogen is similar to that of the mature form, consisting of a single disk-like domain with a deep active cleft at the edge of the molecule. A major portion of the prosequence (45 additional amino acid residues at the N terminus of the mature transglutaminase) folds into an L-shaped structure, consisting of an extended N-terminal segment linked with a one-turn short helix and a long α-helix. Two key residues in the short helix of the prosequence, Tyr-12 and Tyr-16, are located on top of the catalytic triad (Cys-110, Asp-301, and His-320) to block access of the substrate acyl donors and acceptors. Biochemical characterization of the mature MTGase, using N-α-benzyloxycarbonyl-L-glutaminylglycine as a substrate, revealed apparent K m and k cat /K m values of 52.66 mM and 40.42 mM -1 min -1 , respectively. Inhibition studies using the partial prosequence SYAETYR and homologous sequence SQAETYR showed a noncompetitive inhibition mechanism with IC 50 values of 0.75 and 0.65 mM, respectively, but no cross-linking product formation. Nevertheless, the prosequence homologous oligopeptide SQAETQR, with Tyr-12 and Tyr-16 each replaced with Gln, exhibited inhibitory activity with the formation of the SQAETQR-monodansylcadaverine fluorophore cross-linking product (SQAETQR-C-DNS). MALDI-TOF tandem MS analysis of SQAETQR-C-DNS revealed molecular masses corresponding to those of N SQAETQ C -C-DNS and C-DNS- N QR C sequences, suggesting the incorporation of C-DNS onto the C-terminal Gln residue of the prosequence homologous oligopeptide. These results support the putative functional roles of both Tyr residues in substrate binding and inhibition.