beta-Lactam acylases are crucial for the synthesis of semisynthetic cephalosporins and penicillins. Unfortunately, there are no cephalosporin acylases known that can efficiently hydrolyse the amino-adipic side chain of Cephalosporin C. In a previous directed evolution experiment, residue Asn266 of the glutaryl acylase from Pseudomonas SY-77 was identified as being important for substrate specificity. In order to explore the function of this residue in substrate specificity, we performed a complete mutational analysis of position 266. Codons for all amino acids were introduced in the gene, 16 proteins that could be functionally expressed in Escherichia coli were purified to homogeneity and their catalytic parameters were determined. The mutant enzymes displayed a broad spectrum of affinities and activities, pointing to the flexibility of the enzyme at this position. Mutants in which Asn266 was changed into Phe, Gln, Trp and Tyr displayed up to twofold better catalytic efficiency (k(cat)/K(m))than the wild-type enzyme when adipyl-7-aminodesacetoxycephalosporanic acid (adipyl-7-ADCA) was used as substrate, due to a decreased K(m). Only mutants SY-77(N266H) and SY-77(N266M) showed an improvement of both catalytic parameters, resulting in 10- and 15-times higher catalytic efficiency with adipyl-7-ADCA, respectively. Remarkably, the catalytic activity (k(cat)) of SY-77(N266M) when using adipyl-7-ADCA as substrate was as high as when glutaryl-7-aminocephalosporanic acid (glutaryl-7-ACA) was used, and approaches commercially interesting activity. SY-77(N266Q), SY-77(N266H) and SY-77(N266M) mutants showed a modest improvement in hydrolysing Cephalosporin C. Since these mutants also have a good catalytic efficiency when adipyl-7-ADCA is used and are still active towards glutaryl-7-ACA, they can be regarded as broad substrate acylases. These results demonstrate that the combination of directed evolution for the identification of important positions, together with saturation mutagenesis for finding the optimal amino acid, is a very effective method for finding improved biocatalysts.