Golgi alpha-mannosidase II, a key enzyme in N-glycan processing, is a target in the development of anti- cancer therapies. The crystal structure of Drosophila Golgi alpha-mannosidase II in the absence and presence of the anti-cancer agent swainsonine and the inhibitor deoxymannojirimycin reveals a novel protein fold with an active site zinc intricately involved both in the substrate specificity of the enzyme and directly in the catalytic mechanism. Identification of a putative GlcNAc binding pocket in the vicinity of the active site cavity provides a model for the binding of the GlcNAcMan(5)GlcNAc(2) substrate and the consecutive hydrolysis of the alpha1,6- and alpha1,3-linked mannose residues. The enzyme-inhibitor interactions observed provide insight into the catalytic mechanism, opening the door to the design of novel inhibitors of alpha-mannosidase II.