Replacing a cassette of 31 residues from Escherichia coli release factor 1 with the equivalent residues in release factor 2 gave a protein active in codon-specific binding to the ribosome but inactive in peptidyl-tRNA hydrolysis. Such a phenotype is also found unexpectedly with release factor 2 when expressed at high concentration in bacteria. Substituting threonine with the release factor 1 equivalent serine at position 246 within the cassette restored the impaired activity of the chimeric protein, and also that of inactive recombinant release factor 2, both in vitro and in vivo. The differences in activity are not due to posttranslational modifications or a lack of it at this residue. Random mutagenesis of codon 246 suggests that this position is pivotal for the function of the release factor, being able to affect differentially both its binding to the ribosome and its peptide release activities. We propose that amino acid 246 is close to a sharp turn (GGQ motif at position 250), and is essential for transmitting the signal from cognate codon recognition by correctly positioning the peptidyl-tRNA hydrolysis domain of the release factor into the peptidyltransferase center.