The structure of the complex of thermolysin and the inhibitor (2-benzyl-3-mercaptopropanoyl)-L-alanylglycinamide has been determined by X-ray crystallography at a resolution of 1.9 A and refined to a crystallographic residual of 18.4%. The binding of this potent, specific inhibitor to thermolysin (Ki = 7.5 X 10(-7) M) serves as a model for the inhibition of zinc peptidases by substrate-analogue mercaptans. The study shows that the mercaptan inhibitor binds to thermolysin with the sulfur, presumably in the anionic form, tetrahedrally coordinated to the zinc and displacing a water molecule bound to the native enzyme. This is the first direct determination of the mode of binding of a mercaptan inhibitor to a zinc peptidase and confirms the geometry of binding expected on general grounds [Ondetti, M. A., Condon, M. E., Reid, J., Sabo, E. F., Cheung, H. S., & Cushman, D. W. (1979) Biochemistry 18, 1427-1430; Nishino, N., & Powers, J. C. (1979) Biochemistry 18, 4340-4347] and inferred from previous spectroscopic studies [Holmquist, B., & Vallee, B. L. (1979) Proc. Natl. Acad. Sci. U.S.A. 76, 6216-6220].