Enteropeptidase is a membrane-bound serine protease that initiates the activation of pancreatic hydrolases by cleaving and activating trypsinogen. The enzyme is remarkably specific and cleaves after lysine residues of peptidyl substrates that resemble trypsinogen activation peptides such as Val-(Asp)4-Lys. To characterize the determinants of substrate specificity, we solved the crystal structure of the bovine enteropeptidase catalytic domain to 2.3 Å resolution in complex with the inhibitor Val-(Asp)4-Lys-chloromethane. The catalytic mechanism and contacts with lysine at substrate position P1 are conserved with other trypsin-like serine proteases. However, the aspartyl residues at positions P2-P4 of the inhibitor interact with the enzyme surface mainly through salt bridges with the N(ζ) atom of Lys99. Mutation of Lys99 to Ala, or acetylation with acetic anhydride, specifically prevented the cleavage of trypsinogen or Gly-(Asp)4Lys-β-naphthylamide and reduced the rate of inhibition by Val-(Asp)4Lys-chloromethane 22 to 90-fold. For these reactions, Lys99 was calculated to account for 1.8 to 2.5 kcal mol-1 of the free energy of transition state binding. Thus, a unique basic exosite on the enteropeptidase surface has evolved to facilitate the cleavage of its physiological substrate, trypsinogen.