The anaerobic pathway for the biosynthesis of cobalamin (vitamin B 12) has remained poorly characterized because of the sensitivity of the pathway intermediates to oxygen and the low activity of enzymes. One of the major bottlenecks in the anaerobic pathway is the ring contraction step, which has not been observed previously with a purified enzyme system. The Gram-positive aerobic bacterium Bacillus megaterium has a complete anaerobic pathway that contains an unusual ring contraction enzyme, CbiH60, that harbors a C-terminal extension with sequence similarity to the nitrite/sulfite reductase family. To improve solubility, the enzyme was homologously produced in the host B. megaterium DSM319. CbiH60 was characterized by electron paramagnetic resonance and shown to contain a [4Fe-4S] center. Assays with purified recombinant CbiH60 demonstrate that the enzyme converts both cobalt-precorrin-3 and cobalt factor III into the ring-contracted product cobalt-precorrin-4 in high yields, with the latter transformation dependent upon DTT and an intact Fe-S center. Furthermore, the ring contraction process was shown not to involve a change in the oxidation state of the central cobalt ion of the macrocycle.