Crystal structures of haloalkane dehalogenase were determined in the presence of the substrate 1,2-dichloroethane. At pH 5 and 4 degrees C, substrate is bound in the active site without being converted; warming to room temperature causes the substrate's carbon-chlorine bond to be broken, producing a chloride ion with concomitant alkylation of the active-site residue Asp124. At pH 6 and room temperature the alkylated enzyme is hydrolysed by a water molecule activated by the His289-Asp260 pair in the active site. These results show that catalysis by the dehalogenase proceeds by a two-step mechanism involving an ester intermediate covalently bound at Asp124.