An experimental and computational study implicate lysine443 in the activation of N²-(2-carboxyethyl)-arginine (CEA) to facilitate the formation of the β-lactam deoxyguanidinoproclavaminic acid (DGPC). The importance of lysine443 as an acid catalyst is demonstrated by its mutation to arginine (60-fold reduction on k_cat). A low energy pathway to β-lactam formation was computed by density functional theory. We show that the energetics are consistent with a facile proton-transfer from lysine to the carbonyl oxygen of CEA, which triggers a nucleophilic attack by the adjacent amine. DFT predicts β-lactam formation may proceed without the lysine acid catalyst; however, the reaction is highly endothermic.