The disaccharide trehalose acts as an osmoprotectant as well as a carbon source in Escherichia coli. At high osmolarity of the growth medium, the cells synthesize large amounts of trehalose internally as an osmoprotectant. However, they can also degrade trehalose as the sole source of carbon under both high- and low-osmolarity growth conditions. The modes of trehalose utilization are different under the two conditions and have to be well regulated (W. Boos, U. Ehmann, H. Forkl, W. Klein, M. Rimmele, and P. Postma, J. Bacteriol. 172:3450-3461, 1990). At low osmolarity, trehalose is transported via a trehalose-specific enzyme II of the phosphotransferase system, encoded by treB. The trehalose-6-phosphate formed internally is hydrolyzed to glucose and glucose 6-phosphate by the key enzyme of the system, trehalose-6-phosphate hydrolase, encoded by treC. We have cloned treC, contained in an operon with treB as the promoter-proximal gene. We have overproduced and purified the treC gene product and identified it as a protein consisting of a single polypeptide with an apparent molecular weight of 62,000 as determined by sodium dodecyl sulfate-polyacrylamide gel electrophoresis. The enzyme hydrolyzes trehalose-6-phosphate with a Km of 6 mM and a Vmax of at least 5.5 mumol of trehalose-6-phosphate hydrolyzed per min per mg of protein. The enzyme also very effectively hydrolyzes p-nitrophenyl-alpha-D-glucopyranoside, but it does not recognize trehalose, sucrose, maltose, isomaltose, or maltodextrins. treC was sequenced and found to encode a polypeptide with a calculated molecular weight of 63,781. The amino acid sequence deduced from the DNA sequence shows homology (50% identity) with those of oligo-1,6-glucosidases (sucrase-isomaltases) of Bacillus spp. but not with those of other disaccharide phosphate hydrolases. This report corrects our previous view on the function of the treC gene product as an amylotrehalase, which was based on the analysis of the metabolic products of trehalose metabolism in whole cells.