Cys-999 is one component of a triad (Cys-999, Ser-830, and Asp-1044) located in the FAD domain of flavocytochrome P450 BM3 that is almost entirely conserved throughout the diflavin reductase family of enzymes. The role of Cys-999 has been studied by steady-state kinetics, stopped-flow spectroscopy, and potentiometry. The C999A mutants of BM3 reductase (containing both FAD and FMN cofactors) and the isolated FAD domain are substantially compromised in their capacity to reduce artificial electron acceptors in steady-state turnover with either NADPH or NADH as electron donors. Stopped-flow studies indicate that this is due primarily to a substantially slower rate of hydride transfer from nicotinamide coenzyme to FAD cofactor in the C999A enzymes. The compromised rates of hydride transfer are not attributable to altered thermodynamic properties of the flavins. A reduced enzyme-NADP(+) charge-transfer species is populated following hydride transfer in the wild-type FAD domain, consistent with the slow release of NADP(+) from the 2-electron-reduced enzyme. This intermediate does not accumulate in the C999A FAD domain or wild-type and C999A BM3 reductases, suggesting more rapid release of NADP(+) from these enzyme forms. Rapid internal electron transfer from FAD to FMN in wild-type BM3 reductase releases NADP(+) from the nicotinamide-binding site, thus preventing the inhibition of enzyme activity through the accumulation of a stable FADH(2)-NADP(+) charge-transfer complex. Hydride transfer is reversible, and the observed rate of oxidation of the 2-electron-reduced C999A BM3 reductase and FAD domain is hyperbolically dependent on NADP(+) concentration. With the wild-type BM3 reductase and FAD domain, the rate of flavin oxidation displays an unusual dependence on NADP(+) concentration, consistent with a two-site binding model in which two coenzyme molecules bind to catalytic and regulatory regions (or sites) within a bipartite coenzyme binding site. A kinetic model is proposed in which binding of coenzyme to the regulatory site hinders sterically the release of NADPH from the catalytic site. The results are discussed in the light of kinetic and structural studies on mammalian cytochrome P450 reductase.