Neuraminidase is one of the two glycoprotein spikes protruding from the influenza virus membrane. We have determined by X-ray crystallography the native structure of B/Lee/40 neuraminidase (NA) and the structures of its crystals soaked with a substrate, N-acetylneuraminyllactose (NANL), and an inhibitor, 2-deoxy-2,3-didehydro-N-acetylneuraminic acid (DANA) at 1.8-A resolution. NANL was hydrolyzed by the crystalline NA to generate the product N-acetylneuraminic acid (NANA, also known as sialic acid), which is still able to bind to NA. In the difference Fourier map of the presumed NA-NANA complex, the moiety bound in the active site had a distorted boat conformation of NANA, but there is no significant electron density for O2. The structure of the bound moiety is not identical to that of chemically synthesized DANA soaked into NA crystals. Prolonged incubation of NANA with NA in solution at room temperature produced only a trace amount of DANA as detected by NMR. On the basis of our studies, a mechanism is proposed for the enzymatic hydrolysis by influenza virus neuraminidase.