Phosphate: acyl-acyl carrier protein (ACP) acyltransferase PlsX is a peripheral enzyme catalysing acyl transfer to orthophosphate in phospholipid synthesis. Little is known about how it recognises substrates and catalyses the acyl transfer. Here we show that its active site includes many residues lining a long, narrow gorge at the dimeric interface, two positive residues forming a positive ACP docking pad next to the interfacial gorge, and a number of strictly conserved residues significantly contributing to the catalytic activity. These findings suggest a substrate recognition mode and a catalytic mechanism that are different from those of phosphotransacetylases catalysing a similar acyl transfer reaction. The catalytic mechanism involves substrate activation and transition-state stabilization by two strictly conserved residues, Lys184 and Asn229. Another noticeable feature of the catalysis is the release of the acyl phosphate product near the membrane, which might facilitate its membrane insertion.