Sphingopyxis terrae and the Sphingopyxis macrogoltabida strains 103 and 203 are able to degrade polyethylene glycol (PEG). They possess the peg operon, which is responsible for the conversion of PEG to PEG-carboxylate-coenzyme A (CoA). The upstream (3.0 kb) and downstream (6.5 kb) regions of the operon in strain 103 were cloned and sequenced. The structure was well conserved between S. macrogoltabida strain 203 and S. terrae, except that two sets of transposases are absent in strain 203. The downstream region contains the genes for PEG-carboxylate dehydrogenase (PCDH), glutathione S-transferase (GST), tautomerase, and a hypothetical protein. The genes for pcdh and gst were transcribed constitutively and monocistronically, indicating that their transcription is independent of the operon regulation. PCDH and GST were expressed in Escherichia coli and characterized biochemically. PCDH is a homotetramer of 64-kDa subunits and contains one molecule of flavin adenine dinucleotide per subunit. The enzyme dehydrogenates PEG-carboxylate to yield glyoxylate, suggesting that the enzyme is the third enzyme involved in PEG degradation. GST is a homodimer of 28-kDa subunits. GST activity was noncompetitively inhibited by acyl-CoA and PEG-carboxylate-CoA, suggesting the interaction of GST with them. The proposed role for GST is to buffer the toxicity of PEG-carboxylate-CoA.