It is shown here that Escherichia coli β-galactosidase has a second Mg 2+ binding site that is important for activity. Binding of Mg 2+ to the second site caused the k cat (with oNPG as the substrate) to increase about 100s −1 ; the K m was not affected. The K d for binding the second Mg 2+ is about 10 −4 M. Since the concentration of free Mg 2+ in E. coli is about 1–2mM, the second site is physiologically significant. Non-polar substitutions (Ala or Leu) for Glu-797, a residue in an active site loop, eliminated the k cat increase. This indicates that the second Mg 2+ site is near to Glu-797. The K i values of transition state analogs were decreased by small but statistically significant amounts when the second Mg 2+ site was occupied and Arrhenius plots showed that less entropic activation energy is required when the second site is occupied. These inhibitor and temperature results suggest that binding of the second Mg 2+ helps to order the active site for stabilization of the transition state.