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D-psicose, a rare sugar produced by the enzymatic reaction of D-tagatose 3-epimerase (DTEase), has been used extensively for the bioproduction of various rare carbohydrates. Recently characterized D-psicose 3-epimerase (DPEase) from Agrobacterium tumefaciens was found to belong to the DTEase family and to catalyze the interconversion of D-fructose and D-psicose by epimerizing the C-3 position, with marked efficiency for D-psicose. The crystal structures of DPEase and its complex with the true substrate D-fructose were determined; DPEase is a tetramer and each monomer belongs to a TIM-barrel fold. The active site in each subunit is distinct from that of other TIM-barrel enzymes, which use phosphorylated ligands as the substrate. It contains a metal ion with octahedral coordination to two water molecules and four residues that are absolutely conserved across the DTEase family. Upon binding of D-fructose, the substrate displaces water molecules in the active site, with a conformation mimicking the intermediate cis-enediolate. Subsequently, Trp112 and Pro113 in the beta4-alpha4 loop undergo significant structural changes, sealing off the active site. Structural evidence and site-directed mutagenesis of the putative catalytic residues suggest that the metal ion plays a pivotal role in catalysis by anchoring the bound D-fructose, and Glu150 and Glu244 carry out an epimerization reaction at the C-3 position.