Sir2 enzymes are broadly conserved from bacteria to humans and have been implicated to play roles in gene silencing, DNA repair, genome stability, longevity, metabolism, and cell physiology. These enzymes bind NAD(+) and acetyllysine within protein targets and generate lysine, 2'-O-acetyl-ADP-ribose, and nicotinamide products. To provide structural insights into the chemistry catalyzed by Sir2 proteins we report the high-resolution ternary structure of yeast Hst2 (homologue of Sir two 2) with an acetyllysine histone H4 peptide and a nonhydrolyzable NAD(+) analogue, carba-NAD(+), as well as an analogous ternary complex with a reaction intermediate analog formed immediately after nicotinamide hydrolysis, ADP-ribose. The ternary complex with carba-NAD(+) reveals that the nicotinamide group makes stabilizing interactions within a binding pocket harboring conserved Sir2 residues. Moreover, an asparagine residue, N116, strictly conserved within Sir2 proteins and shown to be essential for nicotinamide exchange, is in position to stabilize the oxocarbenium intermediate that has been proposed to proceed the hydrolysis of nicotinamide. A comparison of this structure with the ADP-ribose ternary complex and a previously reported ternary complex with the 2'-O-acetyl-ADP-ribose reaction product reveals that the ribose ring of the cofactor and the highly conserved beta1-alpha2 loop of the protein undergo significant structural rearrangements to facilitate the ordered NAD(+) reactions of nicotinamide cleavage and ADP-ribose transfer to acetate. Together, these studies provide insights into the chemistry of NAD(+) cleavage and acetylation by Sir2 proteins and have implications for the design of Sir2-specific regulatory molecules.