Protein farnesyltransferase catalyzes the lipid modification of protein substrates containing Met, Ser, Gln, or Ala at their C-terminus. A closely related enzyme, protein geranylgeranyltransferase type I, carries out a similar modification of protein substrates containing a C-terminal Leu residue. Analysis of a mutant of protein farnesyltransferase containing a Tyr-to-Leu substitution at position 361 in the beta subunit led to the conclusion that the side chain of this Tyr residue played a major role in recognition of the protein substrates. However, no interactions have been observed between this Tyr residue and peptide substrates in the crystal structures of protein farnesyltransferase. In an attempt to reconcile these apparently conflicting data, a thorough kinetic characterization of the Y361L variant of mammalian protein farnesyltransferase was performed. Direct binding measurements for the Y361L variant yielded peptide substrate binding that was actually some 40-fold tighter than that with the wild-type enzyme. In contrast, binding of the peptide substrate for protein geranylgeranyltransferase type I was very weak. The basis for the discrepancy was uncovered in a pre-steady-state kinetic analysis, which revealed that the Y361L variant catalyzed farnesylation of a normal peptide substrate at a rate similar to that of the wild-type enzyme in a single turnover, but that subsequent turnover was prevented. These and additional studies revealed that the Y361L variant does not "switch" protein substrate specificity as concluded from steady-state parameters; rather, this variant exhibits severely impaired product dissociation with its normal substrate, a situation resulting in a greatly compromised steady-state activity.