During the final stages of cell-wall synthesis in bacteria, penicillin-binding proteins (PBPs) catalyse the cross-linking of peptide chains from adjacent glycan strands of nascent peptidoglycan. We have recently shown that this step can be bypassed by an L,D-transpeptidase, which confers high-level beta-lactam-resistance in Enterococcus faecium. The resistance bypass leads to replacement of D-Ala4-->D-Asx-L-Lys3 cross-links generated by the PBPs by L-Lys3-->D-Asx-L-Lys3 cross-links generated by the L,D-transpeptidase. As the first structure of a member of this new transpeptidase family, we have determined the crystal structure of a fragment of the L,D-transpeptidase from E.faecium (Ldt(fm217)) at 2.4A resolution. Ldt(fm217) consists of two domains, the N-terminal domain, a new mixed alpha-beta fold, and the ErfK_YbiS_YhnG C-terminal domain, a representative of the mainly beta class of protein structures. Residue Cys442 of the C-terminal domain has been proposed to be the catalytic residue implicated in the cleavage of the L-Lys-D-Ala peptide bond. Surface analysis of Ldt(fm217) reveals that residue Cys442 is localized in a buried pocket and is accessible by two paths on different sides of the protein. We propose that the two paths to the catalytic residue Cys442 are the binding sites for the acceptor and donor substrates of the L,D-transpeptidase.