Cyclodextrin glycosyltransferase (CGTase) uses an alpha-retaining double displacement mechanism to catalyze three distinct transglycosylation reactions. To investigate these reactions as catalyzed by the CGTase from Thermoanaerobacterium thermosulfurigenes the enzyme was overproduced (8 mg.L(-1) culture) using Bacillus subtilis as a host. Detailed analysis revealed that the three reactions proceed via different kinetic mechanisms. The cyclization reaction (cyclodextrin formation from starch) is a one-substrate reaction, whereas the other two transglycosylation reactions are two-substrate reactions, which obey substituted enzyme mechanism kinetics (disproportionation reaction) or ternary complex mechanism kinetics (coupling reaction). Analysis of the effects of acarbose and cyclodextrins on the disproportionation reaction revealed that cyclodextrins are competitive inhibitors, whereas acarbose is a mixed type of inhibitor. Our results show that one molecule of acarbose binds either in the active site of the free enzyme, or at a secondary site of the enzyme-substrate complex. The mixed inhibition thus indicates the existence of a secondary sugar binding site near the active site of T. thermosulfurigenes CGTase.