Chemical modification of beef kidney D-aspartate oxidase by phenylglyoxal is a biphasic process involving the transient formation of an enzymatic species with a decreased activity versus dicarboxylic substrates, an increased activity versus D-proline and a new activity versus other monocarboxylic D-amino acids which is absent in the native protein. Prolonged incubation with the modifier causes complete inactivation of the enzyme. The presence of the competitive inhibitor L-tartrate in the incubation mixture prevents enzyme inactivation. Kinetic and structural data suggest that complete loss of activity is paralleled by modification of eight arginine residues, of which two are critical for the specificity and the activity of the enzyme. We propose that the two essential arginine residues are located in the substrate binding site of D-aspartate oxidase.