Archaeal geranylgeranyl diphosphate (GGPP) synthase catalyzes the consecutive condensation of isopentenyl diphosphate (IPP) with allylic diphosphates to produce GGPP with significant amounts of intermediates. To obtain information about the amino acids involved in the condensation and the release of intermediates, we randomly mutagenized two proximal regions, I and II, of the Sulfolobus acidocaldarius GGPP synthase gene and created two degenerate libraries, I and II, respectively. Regions I and II correspond to amino acid residues 170-173 and 166-168, respectively. The prenyltransferase activities of about 200 clones were analyzed using the in vivo red-white system and the conventional in vitro assay. Although, in library I, no mutated enzymes that failed to catalyze the formation of GGPP were found, as assayed with the red-white system, almost all the mutated enzymes exhibited weak GGPP synthesis activity, and many produced large amounts of intermediates. The formation of intermediates increased as the concentration of IPP was decreased or as the concentration of the allylic substrate was increased. These phenomena can be regarded as a reflection of the increased K_m for IPP and the decreased affinity for products including intermediates. On the other hand, no mutants from library II showed such changes. These results suggest that the region from 170 to 173 is concerned in the recognition of both IPP and allylic diphosphates, and that the change in responsiveness to prenyl diphosphates causes a change in intermediate formation.