A conserved glutamate covalently attaches the heme to the protein backbone of eukaryotic CYP4 P450 enzymes. In the related Bacillus megaterium P45 BM3, the corresponding residue is Ala264. The A264E mutant was generated and characterized by kinetic and spectroscopic methods. A264E has an altered absorption spectrum compared with the wild-type enzyme (Soret maximum at ∼420.5 nm). Fatty acid substrates produced an inhibitor-like spectral change, with the Soret band shifting to 426 nm. Optical titrations with long-chain fatty acids indicated higher affinity for A264E over the wild-type enzyme. The heme iron midpoint reduction potential in substrate-free A264E is more positive than that in wild-type P450 BM3 and was not changed upon substrate binding. EPR, resonance Raman, and magnetic CD spectroscopies indicated that A264E remains in the low-spin state upon substrate binding, unlike wild-type P450 BM3. EPR spectroscopy showed two major species in substrate-free A264E. The first has normal Cys-aqua iron ligation. The second resembles formate-ligated P450cam. Saturation with fatty acid increased the population of the latter species, suggesting that substrate forces on the glutamate to promote a Cys-Glu ligand set, present in lower amounts in the substrate-free enzyme. A novel charge-transfer transition in the near. Infrared magnetic CD spectrum provides a spectroscopic signature characteristic of the new A264E heme iron ligation state. A264E retains oxygenase activity, despite glutamate coordination of the iron, indicating that structural rearrangements occur following heme iron reduction to allow dioxygen binding. Glutamate coordination of the heme iron is confirmed by structural studies of the A264E mutant (Joyce, M. G., Girvan, H. M., Munro, A. W., and Leys, D. (2004) J. Biol. Chem. 279, 23287-23293).