In (serine) carboxypeptidase Y the recognition of the C-terminal carboxylate group of peptide substrates is due to the side chains of Asn51 and Glu145 functioning as hydrogen bond donors. Carboxypeptidase Y mutants, where these amino acid residues have been substituted for other residues, have been investigated for their applicability in transacylation reactions. It is shown that Glu145 is not important for the binding of amino acid nucleophiles, consistent with the fact that at basic pH, where synthesis reactions are carried out, Glu145 cannot act as a hydrogen bond donor when deprotonated. In fact, its substitution for Ala is beneficial for the yield of synthesis, an effect which is probably due to complete or partial elimination of the charge repulsion between the alpha-carboxylate group of the amino acid nucleophiles and Glu145 creating more favorable binding modes for the nucleophiles. Replacement of Asn51 with Ala eliminates the capacity of the enzyme to accept amino acids as nucleophiles, suggesting that a hydrogen bond donor at position 51 is required. Incorporation of other hydrogen bond donors at this position, i.e. Ser and Gln, shows that the distance of the bound nucleophile to the acylated Ser146 is important for synthesis yields. With Ser (long distance), Asn (wild-type), and Gln (short distance) the yields using H-Val-OH as nucleophile were 5%, 32%, and 97%, respectively. On the other hand, a mutant enzyme with a Gln at position 51 results in a lower k(cat) for the hydrolysis of peptide substrates as compared to an Asn (wild-type) or a Ser at this position. Thus, short distance is favorable for synthesis and unfavorable for hydrolysis. A novel mechanism for carboxy peptidase Y-catalyzed transacylation reactions, describing the fraction of aminolysis (fa) by the parameters fa(max) and K(N,app), is suggested. This mechanism contains the new feature that hydrolysis of the acyl-enzyme is possible with the leaving group/nucleophile bound within the S1’ binding site. It is further shown that the low yields often encountered in transpeptidation reactions are due to attack by water on the acyl-enzyme intermediate, while the leaving group remains bound to the enzyme. This reaction maybe suppressed by mutational alterations of the enzyme, hence increasing its synthetic capability, in particular in amidation reactions.