Physiological properties of the murG gene product of Escherichia coli were investigated. The inactivation of the murG gene rapidly inhibits peptidoglycan synthesis in exponentially growing cells. As a result, various alterations of cell shape are observed, and cell lysis finally occurs when the peptidoglycan content is 40% lower than that of normally growing cells. Analysis of the pools of peptidoglycan precursors reveals the concomitant accumulation of UDP-N-acetylglucosamine (UDP-GlcNAc) and UDP-N-acetylmuramyl-pentapeptide (UDP-MurNAc-pentapeptide) and, to a lesser extent, that of undecaprenyl-pyrophosphoryl-MurNAc-pentapeptide (lipid intermediate I), indicating that inhibition of peptidoglycan synthesis occurs after formation of the cytoplasmic precursors. The relative depletion of the second lipid intermediate, undecaprenyl-pyrophosphoryl-MurNAc-(pentapeptide)GlcNAc, shows that inactivation of the murG gene product does not prevent the formation of lipid intermediate I but inhibits the next reaction in which GlcNAc is transferred to lipid intermediate I. In vitro assays for phospho-MurNAc-pentapeptide translocase and N-acetylglucosaminyl transferase activities finally confirm the identification of the murG gene product as the transferase that catalyzes the conversion of lipid intermediate I to lipid intermediate II in the peptidoglycan synthesis pathway. Plasmids allowing for a high overproduction of the transferase and the determination of its N-terminal amino acid sequence were constructed. In cell fractionation experiments, the transferase is essentially associated with membranes when it is recovered.