The enzymatic properties of acid phosphatase (orthophosphoric-monoester phosphohydrolase, EC 3.1.3.2) encoded by PHO3 gene in Saccharomyces cerevisiae, which is repressed by thiamin and has thiamin-binding activity at pH 5.0, were investigated to study physiological functions. The following results led to the conclusion that thiamin-repressible acid phosphatase physiologically catalyzes the hydrolysis of thiamin phosphates in the periplasmic space of S. cerevisiae, thus participating in utilization of the thiamin moiety of the phosphates by yeast cells: (a) thiamin-repressible acid phosphatase showed Km values of 1.6 and 1.7 microM at pH 5.0 for thiamin monophosphate and thiamin pyrophosphate, respectively. These Km values were 2-3 orders of magnitude lower than those (0.61 and 1.7 mM) for p-nitrophenyl phosphate; (b) thiamin exerted remarkable competitive inhibition in the hydrolysis of thiamin monophosphate (Ki 2.2 microM at pH 5.0), whereas the activity for p-nitrophenyl phosphate was slightly affected by thiamin; (c) the inhibitory effect of inorganic phosphate, which does not repress the thiamin-repressible enzyme, on the hydrolysis of thiamin monophosphate was much smaller than that of p-nitrophenyl phosphate. Moreover, the modification of thiamin-repressible acid phosphatase of S. cerevisiae with 1-ethyl-3-(3-dimethylaminopropyl)carbodiimide resulted in the complete loss of thiamin-binding activity and the Km value of the modified enzyme for thiamin monophosphate increased nearly to the value of the native enzyme for p-nitrophenyl phosphate. These results also indicate that the high affinity of the thiamin-repressible acid phosphatase for thiamin phosphates is due to the thiamin-binding properties of this enzyme.