The N-acetylglucosaminidase NagZ of Pseudomonas aeruginosa catalyzes the first cytoplasmic step in recycling of muropeptides, cell-wall-derived natural products. This reaction regulates gene expression for the beta-lactam resistance enzyme, beta-lactamase. The enzyme catalyzes hydrolysis of N-acetyl-beta-D-glucosamine-(1 -> 4)-1,6-anhydro-N-acetyl-beta-D-muramyl-peptide (1) to N-acetyl-beta-D-glucosamine (2) and 1,6-anhydro-N-acetyl-beta-nmuramyl-peptide (3). The structural and functional aspects of catalysis by NagZ were investigated by a total of seven X-ray structures, three computational models based on the X-ray structures, molecular-dynamics simulations and mutagenesis. The structural insights came from the unbound state and complexes of NagZ with the substrate, products and a mimetic of the transient oxocarbenium species, which were prepared by synthesis. The mechanism involves a histidine as acid/base catalyst, which is unique for glycosidases. The turnover process utilizes covalent modification of D244, requiring two transition-state species and is regulated by coordination with a zinc ion. The analysis provides a seamless continuum for the catalytic cycle, incorporating large motions by four loops that surround the active site.