Enniatin synthetase, a multifunctional enzyme catalyzing depsipeptide formation in Fusarium oxysporum was purified to 98% homogeneity as judged by analytical disc gel electrophoresis. The enzyme consists of a single polypeptide chain of a molecular weight of about 250 000. Similar to a number of peptide synthetases and to fatty acid synthetase the enzyme contains 4'-phosphopantetheine as a prosthetic group. Studies on substrate specificity revealed that the enzyme is capable of synthesizing enniatins A--C and also mixed-type enniatins containing more than one species of amino acid. A linear dependence of rate of enniatin synthesis on enzyme concentration was observed, indicating that depsipeptide formation is an intramolecular process. Omission of the methyl donor S-adenosyl-L-methionine resulted in the formation of unmethylated enniatins with a reaction rate of about 10% of that observed in the case of enniatins. Sulfhydryl-directed reagents generally had an inhibitory influence on enniatin synthesis. However, inhibition studies with iodoacetamide revealed that it behaves differently toward the hydroxy acid site(s) and amino acid site(s). This indicates the presence of chemically distinct thiol groups in the active sites for the two substrates.