The enzyme mechanism of sialidase from influenza virus has been investigated by kinetic isotope methods, NMR, and a molecular dynamics simulation of the enzyme-substrate complex. Comparison of the reaction rates obtained with the synthetic substrate 4-methylumbelliferyl-N-acetyl-alpha-D-neuraminic acid and the [3,3-2H]-substituted substrate revealed beta-deuterium isotope effects for V/Km ranging over 1.09-1.15 in the pH range 6.0-9.5, whereas the effects observed for V in this pH range increased from 0.979 to 1.07. In D2O, beta DV/Km was slightly increased by 2% and 5% at pD 6.0 and 9.5 respectively, while beta DV was unchanged. Solvent isotope effects of 1.74 were obtained for both beta DV/Km and beta DV at pD 9.5, with beta DV/Km decreasing and beta DV remaining constant at acidic pD. 1H-NMR experiments confirmed that the initial product of the reaction is the alpha-anomer of N-acetyl-D-neuraminic acid. Molecular dynamics studies identified a water molecule in the crystal structure of the sialidase-N-acetyl-D-neuraminic acid complex which is hydrogen-bonded to Asp151 and is available to act as a proton donor source in the enzyme reaction. The results of this study lead us to propose a mechanism for the solvent-mediated hydrolysis of substrate by sialidase that requires the formation of an endocyclic sialosyl cation transition-state intermediate.