Escherichia coli K1 is a leading pathogen in neonatal sepsis and meningitis. The K1 capsule, composed of alpha2,8-linked polysialic acid, represents the major virulence factor. In some K1 strains, phase-variable O-acetylation of the capsular polysaccharide is observed, a modification that is catalyzed by the prophage-encoded O-acetyltransferase NeuO. Phase variation is mediated by changes in the number of heptanucleotide repeats within the 5'-coding region of neuO, and full-length translation is restricted to repeat numbers that are a multiple of three. To understand the biochemical basis of K1 capsule O-acetylation, NeuO encoded by alleles containing 0, 12, 24, and 36 repeats was expressed and purified to homogeneity via a C-terminal hexahistidine tag. All NeuO variants assembled into hexamers and were enzymatically active with a high substrate specificity toward polysialic acid with \textgreater14 residues. Remarkably, the catalytic efficiency (k(cat)/K(m)(donor)) increased linearly with increasing numbers of repeats, revealing a new mechanism for modulating NeuO activity. Using homology modeling, we predicted a three-dimensional structure primarily composed of a left-handed parallel beta-helix with one protruding loop. Two amino acids critical for catalytic activity were identified and corresponding alanine substitutions, H119A and W143A, resulted in a complete loss of activity without affecting the oligomerization state. Our results indicate that in NeuO typical features of an acetyltransferase of the left-handed beta-helix family are combined with a unique regulatory mechanism based on variable N-terminal protein extensions formed by tandem copies of an RLKTQDS heptad.