The enzyme N epsilon-hydroxylysine acetylase has been isolated from Escherichia coli 294 carrying recombinant plasmid ABN11. Activity of the enzyme was followed by measurement of the rate of appearance of 2-nitro-5-thiobenzoate, the product of cleavage of 5,5'-dithiobis(2-nitrobenzoate) by free coenzyme A released from its acetyl derivative. The enzyme bound firmly to Reactive Blue 2-Sepharose CL-6B and was eluated with 1.5 M KCl. The protein gave a single band, corresponding to a Mr of 33,000, on polyacrylamide gel electrophoresis in sodium dodecyl sulfate. In contrast, gel filtration of the native enzyme gave a Mr of 150,000-200,000. A sequence analysis of the DNA at the junction of the first and second genes in the aerobactin operon, considered in conjunction with the N-terminal amino acid sequence of the isolated protein, enabled the conclusion that the acetylase is specified by the second gene in the complex. The enzyme transfers the acetyl moiety from acetyl coenzyme A to a variety of hydroxylamines, with N epsilon-hydroxylysine as the preferred substrate. In agreement with the results found by affinity chromatography, Coomassie Blue was observed to act as a potent inhibitor.