The Escherichia coli protein YmdB belongs to the macrodomain protein family, which can bind ADP-ribose (ADPr) and its derivatives. Recently, YmdB was reported to be capable of deacetylating O-acetyl-ADP-ribose (0AADPr) to yield ADPr and free acetate. To study the substrate specificity and catalytic mechanism, the crystal structures of E. coli YmdB in complex with ADPr, double mutant N25AD35A complexed with 2'-OAADPr, and Y126A/ADPr complex were solved at 1.8 angstrom, 2.8 angstrom and 3.0 angstrom resolution, respectively. Structural and biochemical studies reveal that YmdB has substrate specificity against 2'-OAADPr. The conserved residues Asn25 and Asp35 are crucial for catalytic activity, and an active water molecule is proposed as the nucleophile to attack the acetyl group of 2'-OAADPr. Our findings indicate that the conserved phenyl group of Tyr126 plays a crucial role in catalytic activity by stabilizing the right orientation of distal ribose and that Gly32 may be important for activity by interacting with the acetyl group of 2'-OAADPr. Based on these observations, a model of YmdB in complex with 2'-OAADPr was made to illustrate the proposed catalytic mechanism of YmdB. (C) 2015 Elsevier Inc. All rights reserved.