Lipochitin oligosaccharides are organogenesis-inducing signal molecules produced by rhizobia to establish the formation of nitrogen-fixing root nodules in leguminous plants. Chitin oligosaccharide biosynthesis by the Mesorhizobium loti nodulation protein NodC was studied in vitro using membrane fractions of an Escherichia coli strain expressing the cloned M. loti nodC gene. The results indicate that prenylpyrophosphate-linked intermediates are not involved in the chitin oligosaccharide synthesis pathway. We observed that, in addition to N-acetylglucosamine (GlcNAc) from UDP-GlcNAc, NodC also directly incorporates free GlcNAc into chitin oligosaccharides. Further analysis showed that free GlcNAc is used as a primer that is elongated at the nonreducing terminus. The synthetic glycoside p-nitrophenyl-beta-N-acetylglucosaminide (pNPGlcNAc) has a free hydroxyl group at C4 but not at C1 and could also be used as an acceptor by NodC, confirming that chain elongation by NodC takes place at the nonreducing-terminal residue. The use of artificial glycosyl acceptors such as pNPGlcNAc has not previously been described for a processive glycosyltransferase. Using this method, we show that also the DG42-directed chitin oligosaccharide synthase activity, present in extracts of zebrafish embryos, is able to initiate chitin oligosaccharide synthesis on pNPGlcNAc. Consequently, chain elongation in chitin oligosaccharide synthesis by M. loti NodC and zebrafish DG42 occurs by the transfer of GlcNAc residues from UDP-GlcNAc to O4 of the nonreducing-terminal residue, in contrast to earlier models on the mechanism of processive beta-glycosyltransferase reactions.