The SQD1 enzyme is believed to be involved in the biosynthesis of the sulfoquinovosyl headgroup of plant sulfolipids, catalyzing the transfer of SO(3)(-) to UDP-glucose. We have determined the structure of the complex of SQD1 from Arabidopsis thaliana with NAD(+) and the putative substrate UDP-glucose at 1.6-A resolution. Both bound ligands are completely buried within the binding cleft, along with an internal solvent cavity which is the likely binding site for the, as yet, unidentified sulfur-donor substrate. SQD1 is a member of the short-chain dehydrogenase/reductase (SDR) family of enzymes, and its structure shows a conservation of the SDR catalytic residues. Among several highly conserved catalytic residues, Thr-145 forms unusually short hydrogen bonds with both susceptible hydroxyls of UDP-glucose. A His side chain may also be catalytically important in the sulfonation.