Crystals of cyclodextrin glycosyltransferase (CGTase) from Bacillus circulans strain 251 were soaked in buffer solutions containing the pseudotetrasaccharide acarbose, a strong amylase- and CGTase inhibitor. The X-ray structure of the complex was elucidated at 2.5-Angstrom resolution with a final crystallographic R value of 15.8% for all data between 8.0 and 2.5 Angstrom. Acarbose is bound near the catalytic residues Asp229, Glu257, and Asp328. The carboxylic group of Glu257 is at hydrogen bonding distance from the glycosidic oxygen in the scissile bond between the B and C sugars (residue A is at the nonreducing end of the inhibitor). Asp328 makes hydrogen bonds with the 4-amino-4,6-dideoxyglucose (residue B), and Asp229 is in a close van der Waals contact with the C1 atom of this sugar. From this we conclude that in CGTase Glu257 acts as the proton donor and Asp229 serves as the general base or nucleophile, while Asp328 is involved in substrate binding and may be important for elevating the pK(a) of Glu257. On the basis of these results it appears that the absence of the C6-hydroxyl group in the B sugar is responsible for the inhibitory properties of acarbose on CGTase. This suggests that the C6-hydroxyl group of this sugar plays an essential role in the catalytic mechanism of CGTase. The binding mode of acarbose in CGTase differs from that observed in the complex of pancreatic alpha-amylase with acarbose where the catalytic Glu was found to be hydrogen bonded to the glycosidic nitrogen linking the A and B residues [Qian, M., Haser, R., Buisson, G., Duee, E., and Payan, F. (1994) Biochemistry 33, 6284-6294].