The crystal structure of the complex of the TEM-1 beta-lactamase from Escherichia coil inhibited by 6 alpha-(hydroxymethyl)penicillanic acid (1) is reported herein. This is the first structure for an acyl-enzyme intermediate with a substrate reported for a native class A beta-lactamase. This compound was designed and synthesized as a molecule that would acylate the active site of the enzyme, but would resist deacylation by virtue of the fact that its C-6 alpha hydroxymethyl moiety was expected to occupy the space near the hydrolytic water molecule (J. Am. Chem. Sec. 1995, 117, 11055), The crystal structure of the acyl-enzyme species is closely similar to one of the two energy-minimized acyl-enzyme models generated in the course of the design aspect of the work. The crystal structure provides evidence for a number of mechanistic features for the inhibition process and the ultimate recovery of the activity. Our results reported herein are consistent with the side-chain carboxylate of Glu-166 being the active-site basic function that activates the hydrolytic water for the deacylation step in the course of catalysis by class A beta-lactamases. The design principles applied for compound 1 hold the promise of general utility for development of novel inhibitors for other hydrolytic enzymes.