The isolation of a disaccharide, N-acetyl-β -D-glucosaminyl-(1 --> 4) N-acetylmuramic acid (NAG-NAM) and a corresponding tetrasaccharide, from lysozyme digests of Micrococcus lysodeikticus cell walls, is described. These compounds have been used for the study of the enzymic activity of lysozyme. Digestion of the tetrasaccharide into disaccharide has been followed by (a) paper chromatography, (b) colorimetry, using the Morgan-Elson reaction, and (c) polarimetry. Lysozyme was found to catalyse transglycosylation in addition to hydrolysis, and it is proposed that hydrolysis of the tetrasaccharide does not proceed by direct cleavage, but by a transfer mechanism, via long chain oligosaccharides. N-acetyl-glucosamine and closely related oligosaccharides strongly inhibit the enzymic activity of lysozyme. Fluorescence studies show that these inhibitors interact with the tryptophan residues in the active site of the enzyme.