The crystal structure of a complex formed on reaction of the Enterobacter cloacae P99 cephalosporinase (beta-lactamase) with a phosphonate monoester inhibitor, m-carboxyphenyl [[N-[(p-iodophenyl)acetyl]amino]methyl]phosphonate, has been obtained at 2.3-A resolution. The structure shows that the inhibitor has phosphonylated the active site serine (Ser64) with loss of the m-carboxyphenol leaving group. The inhibitor is positioned in the active site in a way that can be interpreted in terms of a transition-state analog. The arylacetamido side chain is placed as anticipated from analogous beta-lactamoyl complexes of penicillin-recognizing enzymes, with the amino group hydrogen-bonded to the backbone carbonyl of Ser318 (of the B3 beta-strand) and to the amides of Gln120 and Asn152. There is support in the asymmetry of the hydrogen bonding of this side chain to the protein and in the 2-fold disorder of the benzyl group for the considerable breadth in substrate specificity exhibited by class C beta-lactamases. One phosphonyl oxygen atom is in the oxyanion hole, hydrogen-bonded to main-chain NH groups of Ser318 and Ser64, while the other oxygen is solvated, not within hydrogen-bonding distance of any amino acid side chain. The closest active site functional group to the solvated oxygen atom is the Tyr150 hydroxyl group (3.4A); Lys67 and Lys315 are quite distant (4.3 and 5.7 A, respectively). Rather, Tyr150 and Lys67 are more closely associated with Ser64O gamma (2.9 and 3.3 A). This arrangement is interpreted in terms of the transition state for breakdown of the tetrahedral intermediate in the deacylation step of catalysis, where the Tyr150 phenol seems the most likely general acid. Thus, Tyr150, as the phenoxide anion, would be the general base catalyst in acylation, as proposed by Oefner et al. [Nature (1990) 343, 284-288]. The structure is compared with that of a similar phosphonate derivative of a class A beta-lactamase [Chen et al. (1993) J. Mol. Biol. 234, 165-178], and mechanistic comparisons are made. The sensitivity of serine beta-lactamases, as opposed to serine proteinases, toward inhibition by phosphonate monoanions is supported by electrostatic calculations showing a net positive potential only in the catalytic sites of the beta-lactamases.