The variety of results of crystallographic studies of the serine proteases complexed with isocoumarin inhibitors presents a challenging problem to modeling methods and molecular energetics. Therefore, the thermodynamic cycle-perturbation technique has been used to study a model system of elastase and two peptidic inhibitors. Using the program AMBER, the technique correctly predicts changes of the binding constants for the trifluoroacetyl dipeptide inhibitors in comparison with available experimental (kinetic and crystallographic) data. However, the absolute values obtained are shown to be sensitive to the specific electrostatic interaction potential parameters used in the simulations. The reader and user are cautioned that thermodynamic cycle-perturbation results may be too optimistic by underestimating the accuracy of free energy values. This is especially a matter of concern for those cases where a direct comparison with experimental values is not possible, viz., (1) the stimulation of binding of novel compounds, (2) structurally uncertain binding sites, or (3) structurally different binding modes. With our best 4-31G* ESP (electrostatic potential) charges we were able to reproduce experimentally determined free energy differences (delta delta A) with an accuracy of about 1.5 kcal/mol. Dynamically induced structural changes in the binding site of elastase, and particularly changes in hydrogen-bond patterns of the binding site, are also reported.