Vanillyl-alcohol oxidase (EC 1.1.3.7) from Penicillium simplicissimum was modified with p-mercuribenzoate. One cysteine residue reacts rapidly without loss of enzyme activity. Three sulfhydryl groups then react in an 'all or none process' involving enzyme inactivation and dissociation of the octamer into dimers. The inactivation reaction is slowed down in the presence of the competitive inhibitor isoeugenol and fully reversible by treatment of the modified enzyme with dithiothreitol. Vanillyl-alcohol oxidase is more rapidly inactivated at low enzyme concentrations and protected from mercuration by antichaotropic salts. It is proposed that subunit dissociation accounts for the observed sensitivity of vanillyl-alcohol oxidase crystals towards mercury compounds.