UDP-D-apiose/UDP-D-xylose synthase (AXS) catalyzes the conversion of UDP-D-glucuronic acid to UDP-D-apiose and UDP-D-xylose. An acetyl-protected phosphonate analogue of UDP-D-apiose was synthesized and used in an in situ HPLC assay to demonstrate for the first time the ability of AXS to interconvert the two reaction products. Density functional theory calculations provided insight into the energetics of this process and the apparent inability of AXS to catalyze the conversion of UDP-D-xylose to UDP-D-apiose. The data suggest that this observation is unlikely to be due to an unfavorable equilibrium but rather results from substrate inhibition by the most stable chair conformation of UDP-D-xylose. The detection of xylose cyclic phosphonate as the turnover product reveals significant new details about the AXS-catalyzed reaction and supports the proposed retroaldol-aldol mechanism of catalysis.