To understand the biochemical basis for the function of the rotenone-insensitive internal NADH-quinone (Q) oxidoreductase (Ndi1), we have overexpressed mature Ndi1 in Escherichia coli membranes. The Ndi1 purified from the membranes contained one FAD and showed enzymatic activities comparable with the original Ndi1 isolated from Saccharomyces cerevisiae. When extracted with Triton X-100, the isolated Ndi1 did not contain Q. The Q-bound form was easily reconstituted by incubation of the Q-free Ndi1 enzyme with ubiquinone-6. We compared the properties of Q-bound Ndi1 enzyme with those of Q-free Ndi1 enzyme, with higher activity found in the Q-bound enzyme. Although both are inhibited by low concentrations of AC0-11 (IC(50) = 0.2 microm), the inhibitory mode of AC0-11 on Q-bound Ndi1 was distinct from that of Q-free Ndi1. The bound Q was slowly released from Ndi1 by treatment with NADH or dithionite under anaerobic conditions. This release of Q was prevented when Ndi1 was kept in the reduced state by NADH. When Ndi1 was incorporated into bovine heart submitochondrial particles, the Q-bound form, but not the Q-free form, established the NADH-linked respiratory activity, which was insensitive to piericidin A but inhibited by KCN. Furthermore, Ndi1 produces H(2)O(2) as isolated regardless of the presence of bound Q, and this H(2)O(2) was eliminated when the Q-bound Ndi1, but not the Q-free Ndi1, was incorporated into submitochondrial particles. The data suggest that Ndi1 bears at least two distinct Q sites: one for bound Q and the other for catalytic Q.