Catalyzes the conversion of 1-hydroxy-2-methyl-2-(E)-butenyl 4-diphosphate (HMBPP) into a mixture of isopentenyl diphosphate (IPP) and dimethylallyl diphosphate (DMAPP). Acts in the terminal step of the DOXP/MEP pathway for isoprenoid precursor biosynthesis (PubMed:11818558, PubMed:11418107, PubMed:12706830, PubMed:19569147, PubMed:22137895). In vitro, can also hydrate acetylenes to aldehydes and ketones via anti-Markovnikov/Markovnikov addition (PubMed:22948824). H2O + isopentenyl diphosphate + 2 oxidized [2Fe-2S]-[ferredoxin] = (2E)-4-hydroxy-3-methylbut-2-enyl diphosphate + 2 H(+) + 2 reduced [2Fe-2S]-[ferredoxin] dimethylallyl diphosphate + H2O + 2 oxidized [2Fe-2S]-[ferredoxin] = (2E)-4-hydroxy-3-methylbut-2-enyl diphosphate + 2 H(+) + 2 reduced [2Fe-2S]-[ferredoxin] Was shown to bind 1 [3Fe-4S] cluster per subunit (PubMed:19569147, PubMed:20080550, PubMed:15469281). However, it initially contains a [4Fe-4S] cluster which easily degrades into a [3Fe-4S] form in the presence of oxygen (PubMed:12706830, PubMed:22137895, PubMed:20080550, PubMed:22687151). Addition of Ca(2+), Mg(2+), Mn(2+), Ni(2+), Co(2+) or Fe(2+) decreases the catalytic activity (PubMed:15469281). Addition of Zn(2+) results in complete loss of activity (PubMed:15469281). Is potently inhibited by substrate analogs in which the hydroxy group in HMBPP is replaced by an amino or thiol group (PubMed:22012762). Optimum pH is 7.0. Isoprenoid biosynthesis; dimethylallyl diphosphate biosynthesis; dimethylallyl diphosphate from (2E)-4-hydroxy-3-methylbutenyl diphosphate: step 1/1. Isoprenoid biosynthesis; isopentenyl diphosphate biosynthesis via DXP pathway; isopentenyl diphosphate from 1-deoxy-D-xylulose 5-phosphate: step 6/6. Homodimer. Cells lacking this gene are viable only if the medium is supplemented with mevalonate or the cells are complemented with an episomal copy of ispH (PubMed:11418107). A conditional E.coli lytB mutant shows that LytB is essential for survival and that depletion of LytB results in cell lysis (PubMed:11717301). Belongs to the IspH family.