The three-dimensional structure of lipase II of Geotrichum candidum strain ATCC34614 (GCL II) has provided insights with respect to the nature of the catalytic machinery of lipases. To support these structural observations, we have carried out an analysis of GCL II by mutagenesis. The gene encoding lipase II of Geotrichum candidum strain ATCC34614 (GCL II) was amplified using the polymerase chain reaction, cloned, and sequenced. The intronless lipase gene was expressed and secreted from Saccharomyces cerevisiae at approximately 5 mg/liter of culture. Recombinant GCL II was purified by immunoaffinity chromatography and characterized using a combination of substrates and independent analytical methods. The recombinant enzyme and the enzyme isolated from its natural source have comparable specific activities against triolein of about 1000 mumol of oleic acid released/min/mg of protein. The putative catalytic triad Ser217-His463-Glu354 was probed by site-directed mutagenesis. The substitution of Ser217 by either Cys or Thr and of His463 by Ala led to a complete elimination of the activity against both triolein and tributyrin. Substitution of Glu354 by either Ser, Ala or Gln renders the enzyme inactive and also perturbs the enzyme stability. However, the enzyme with the conservative replacement Glu354 Asp is stable and displays only a small decrease of triolein activity but a 10-fold decrease in activity against tributyrin. There was no appreciable difference in esterase activity between the native, recombinant wild type, and Glu354 Asp mutant. These results confirm that the triad formed by Ser217-Glu354-His463 is essential for catalytic activity. They also show that the active site of GCL II is more tolerant to a conservative change of the carboxylic side chain within the triad than are other hydrolases with similar catalytic triads.