A unique form of inhibition by NADH and partial reversal by NAD+ has been demonstrated with Escherichia coli lipoamide dehydrogenase. Substrate inhibition by NADH is consistent with its reduction of the active two-electron reduced enzyme intermediate to the inactive four-electron reduced form. NAD+ partially overcomes this inhibition by mass action reversal of this reduction. NAD+ activation is only partial since the presence of both NAD+ and NADH forces the accumulation of two binary enzyme-pyridine nucleotide complexes. These are intermediates in the two-electron to four-electron reduction of the enzyme and thus are not on the catalytic pathway. NAD+ is also shown to inhibit by binding to the oxidized enzyme to give a dead-end complex. From the steady state rate equations, it is apparent that the degree of inhibition will depend on the oxidation-reduction potential for two- to four-electron reduction of the enzyme. Thus, the wide variation in the severity of NADH inhibition between the E. coli and pig heart enzymes is explained by quantitative differences in the basic lipoamide dehydrogenase mechanism. A possible physiological role for this type of inhibition as a mechanism of control in E. coli is discussed.