Abstract A comparison of the rates of reaction of lipoyl dehydrogenase with dihydrolipoamide, reduced diphosphopyridine nucleotide and oxidized acetyl pyridine diphosphopyridine nucleotide have shown the involvement of the enzyme flavin in the transhydrogenase reaction catalyzed by this enzyme. The previously reported involvement of oxidized diphosphopyridine nucleotide in the catalytic oxidation of reduced diphosphopyridine nucleotide with lipoic acids as acceptors has been investigated by use of Neurospora DPNase, which by hydrolysing oxidized diphosphopyridine nucleotide has permitted a study of the effect of oxidized diphosphopyridine nucleotide on the oxidation-reduction state of the enzyme. It has been found that under certain conditions (which result in inhibition of enzyme activity) two molecules of reduced diphosphopyridine nucleotide will react to produce a fully reduced form of the enzyme, in which both the reactive disulphide and the flavin are fully reduced. Evidence is presented that the active form of the enzyme is a half-reduced form in which both flavin and the disulphide are only partially reduced. A reaction mechanism based on these findings is proposed.