Peptidylglycine monooxygenase (PHM) carries out the hydroxylation of the alpha-C atom of glycine-extended propeptides, the first step in the amidation of peptide hormones by the bifunctional enzyme peptidyl-alpha-amidating monooxygenase (PAM). Since PHM is a copper-containing monooxygenase, a study of the interaction between the reduced enzyme and carbon monoxide has been carried out as a probe of the interaction of the Cu(I) sites with O-2. The results show that, in the absence of peptide substrate, reduced PHM binds CO with a stoichiometry of 0.5 CO/Cu(I), indicating that only one of the two copper centers, Cu-B, forms a Cu(I)-carbonyl. FTIR spectroscopy shows a single band in the 2200-1950 cm(-1) energy region with v(CO) = 2093 cm(-1) assigned to the intraligand C-O stretch via isotopic labeling with (CO)-C-13. A His242Ala mutant of PHM, which deletes the Cu-B site by replacing one of its histidine ligands, completely eliminates CO binding. EXAFS spectroscopy is consistent with binding of a single CO ligand with a Cu-C distance of 1.82 +/- 0.03 Angstrom. The Cu-S(met) distance increases from 2.23 +/- 0.02 Angstrom in the reduced unliganded enzyme to 2.33 +/- 0.01 Angstrom in the carbonylated enzyme, suggesting that the methionine-containing Cu-B center is the site of CO binding. The binding of the peptide substrate N-Actyr-val-gly perturbs the CO ligand environment, eliciting an IR band at 2062 cm(-1) in addition to the 2093 cm(-1) band. (CO)-C-13 isotopic substitution assigns both frequencies as C-O stretching bands, The CO:Cu binding stoichiometry and peptide/CO FTIR titrations indicate that the 2062 cm(-1) band is due to binding of CO at a second site, most likely at the Cu-A center. This suggests that peptide binding may activate the Cu-A center toward O-2 binding and reduction to superoxide. As a result of these findings, a new mechanism is proposed involving channeling of superoxide across the 11 Angstrom distance between the two copper centers.