The X-ray crystal structure of the molecular complex of penicillin G with a deacylation-defective mutant of the RTEM-1 beta-lactamase from Escherichia coli shows how these antibiotics are recognized and destroyed. Penicillin G is covalently bound to Ser 70 0 gamma as an acyl-enzyme intermediate. The deduced catalytic mechanism uses Ser 70 0 gamma as the attacking nucleophile during acylation. Lys 73 N zeta acts as a general base in abstracting a proton from Ser 70 and transferring it to the thiazolidine ring nitrogen atom via Ser 130 0 gamma. Deacylation is accomplished by nucleophilic attack on the penicilloyl carbonyl carbon by a water molecule assisted by the general base, Glu 166.