Gaussia luciferase (GLuc) is one of the most luminescent luciferases known and is widely used as a reporter in biochemistry and cell biology. During catalysis, GLuc undergoes inactivation by irreversible covalent modification. The mechanism by which GLuc generates luminescence and how it becomes inactivated are however not known. Here, we show that GLuc unlike other enzymes has an extensively disordered structure with a minimal hydrophobic core and no apparent binding pocket for the main substrate, coelenterazine. From an alanine scan, we identified two Arg residues required for light production. These residues separated with an average of about 22 Å and a major structural rearrangement is required if they are to interact with the substrate simultaneously. We furthermore show that in addition to coelenterazine, GLuc also can oxidize furimazine, however, in this case without production of light. Both substrates result in the formation of adducts with the enzyme, which eventually leads to enzyme inactivation. Our results demonstrate that a rigid protein structure and substrate-binding site are no prerequisites for high enzymatic activity and specificity. In addition to the increased understanding of enzymes in general, the findings will facilitate future improvement of GLuc as a reporter luciferase.