The glutamic acid residues of the peptidoglycan of Staphylococcus aureus and many other bacteria become amidated by an as yet unknown mechanism. In this communication we describe the identification, in the genome of S. aureus strain COL, of two co-transcribed genes, murT and gatD, which are responsible for peptidoglycan amidation. MurT and GatD have sequence similarity to substrate-binding domains in Mur ligases (MurT) and to the catalytic domain in CobB/CobQ-like glutamine amidotransferases (GatD). The amidation of glutamate residues in the stem peptide of S. aureus peptidoglycan takes place in a later step than the cytoplasmic phase - presumably the lipid phase - of the biosynthesis of the S. aureus cell wall precursor. Inhibition of amidation caused reduced growth rate, reduced resistance to beta-lactam antibiotics and increased sensitivity to lysozyme which inhibited culture growth and caused degradation of the peptidoglycan.