Penicillin-binding proteins (PBPs) catalyse the synthesis of cell wall peptidoglycan. PBP1 of Staphylococcus aureus is a high-molecular-weight monofunctional transpeptidase (TPase) and previous studies with a conditional mutant showed that this protein was essential for bacterial growth and survival: cells in which PBP1 was depleted stopped dividing but continued to enlarge in size, accompanied by rapid loss of viability. Also, cell walls produced under PBP1 depletion appeared to have normal composition. We describe here construction of a second PBP1 mutant in which the active site of the TPase domain was inactivated. Cells in which the wild-type PBP1 was replaced by the mutant protein were able to initiate and complete septa and undergo at least one or two cell divisions after which growth stopped accompanied by inhibition of cell separation, downregulation in the transcription of the autolytic system and production of cell walls with increased proportion of monomeric and dimeric muropeptides and decrease in oligomeric muropeptides. PBP1 seems to perform a dual role in the cell cycle of S. aureus: as a protein required for septation and also as a transpeptidase that generates a critical signal for cell separation at the end of cell division.