The zinc-dependent UDP-3-O-acyl-N-acetylglucosamine deacetylase (LpxC) catalyzes the first committed step in the biosynthesis of lipid A, the hydrophobic anchor of lipopolysaccharide (LPS) that constitutes the outermost monolayer of Gram-negative bacteria. As LpxC is crucial for the survival of Gram-negative organisms and has no sequence homology to known mammalian deacetylases or amidases, it is an excellent target for the design of new antibiotics. The solution structure of LpxC from Aquifex aeolicus in complex with a substrate-analog inhibitor, TU-514, reveals a novel alpha/beta fold, a unique zinc-binding motif and a hydrophobic passage that captures the acyl chain of the inhibitor. On the basis of biochemical and structural studies, we propose a catalytic mechanism for LpxC, suggest a model for substrate binding and provide evidence that mobility and dynamics in structural motifs close to the active site have key roles in the capture of the substrate.