Apolipoprotein N -acyl transferase (Lnt) is an essential membrane-bound protein involved in lipid modification of all lipoproteins in gram-negative bacteria. Essential residues in Lnt of Escherichia coli were identified by using site-directed mutagenesis and an in vivo complementation assay. Based on sequence conservation and known protein structures, we predict a model for Lnt, which is a member of the CN hydrolase family. Besides the potential catalytic triad E267-K335-C387, four residues that directly affect the modification of Braun's lipoprotein Lpp are absolutely required for Lnt function. Residues Y388 and E389 are part of the hydrophobic pocket that constitutes the active site. Residues W237 and E343 are located on two flexible arms that face away from the active site and are expected to open and close upon the binding and release of phospholipid and/or apolipoprotein. Substitutions causing temperature-dependent effects were located at different positions in the structural model. These mutants were not affected in protein stability. Lnt proteins from other proteobacteria, but not from actinomycetes, were functional in vivo, and the essential residues identified in Lnt of E. coli are conserved in these proteins.