Earlier in vivo studies have shown that the sequential action of the IspG and IspH proteins is essential for the reductive transformation of 2C-methyl-d-erythritol 2,4-cyclodiphosphate into dimethylallyl diphosphate and isopentenyl diphosphate via 1-hydroxy-2-methyl-2-(E)-butenyl 4-diphosphate. A recombinant fusion protein comprising maltose binding protein and IspG protein domains was purified from a recombinant Escherichia coli strain. The purified protein failed to transform 2C-methyl-d-erythritol 2,4-cyclodiphosphate into 1-hydroxy-2-methyl-2-(E)-butenyl 4-diphosphate, but catalytic activity could be restored by the addition of crude cell extract from an ispG-deficient E. coli mutant. This indicates that auxiliary proteins are required, probably as shuttles for redox equivalents. On activation by photoreduced 10-methyl-5-deaza-isoalloxazine, the recombinant protein catalyzed the formation of 1-hydroxy-2-methyl-2-(E)-butenyl 4-diphosphate from 2C-methyl-d-erythritol 2,4-cyclodiphosphate at a rate of 1 nmol x min(-1) x mg(-1). Similarly, activation by photoreduced 10-methyl-5-deaza-isoalloxazine enabled purified IspH protein to catalyze the conversion of 1-hydroxy-2-methyl-2-(E)-butenyl 4-diphosphate into a 6:1 mixture of isopentenyl diphosphate and dimethylallyl diphosphate at a rate of 0.4 micromol x min(-1) x mg(-1). IspH protein could also be activated by a mixture of flavodoxin, flavodoxin reductase, and NADPH at a rate of 3 nmol x min(-1) x mg(-1). The striking similarities of IspG and IspH protein are discussed, and plausible mechanistic schemes are proposed for the two reactions.