Physical studies of enzyme-inhibitor complexes have provided an increasingly precise picture of factors contributing to enzyme binding and mechanism. New concepts for enzyme catalysis have resulted, and the design of inhibitors of therapeutically important enzymes, such as the antihypertensive drugs captopril and enalapril, has been stimulated. These studies have been significantly influenced by the transition-state analogue inhibitor hypothesis, one aspect of which states that stable structures resembling the transition state for an enzyme reaction will be bound more tightly than the substrate for the enzyme-catalyzed reaction. Other tight-binding inhibitors are often assumed, because of their low dissociation constants, to resemble a reaction pathway intermediate, such as the transition state, when X-ray crystal data are used to unravel enzyme catalytic mechanisms. If not examined carefully, these intertwined assumptions can become circular arguments, leading to misconceptions about enzyme catalytic mechanisms and to faulty design of inhibitors of new enzymes, many of which offer considerable potential for future drug discovery. One way to approach this problem is to study naturally occurring tight-binding inhibitors of enzymes, many of which possess structural features not easily reconciled with our mechanistic preconceptions. Pepstatin, a putative transition-state analogue inhibitor isolated by Umezawa et al., provides a good example of the information that can be gained from detailed study of a naturally occurring inhibitor by a variety of physical methods. Pepstatin (Iva-Val-Val-Sta-Ala-Sta, 1), which contains the novel amino acid statine [(3S,4S)-4 amino-3-hydroxy-6-methylheptanoic acid, 2, Sta], inhibits most aspartic proteinases with dissociation constants in the range of 0.1-1 nM except for renin. Synthetic manipulations of pepstatin's structure have led to the discovery of novel, potent renin and other aspartic proteinase inhibitors. In addition, molecular modeling based on X-ray crystal data and kinetic studies have led to new examples of biological isosterism and suggested alternate explanations for postulated transition-state analogue mechanisms. 13C NMR studies of ketone analogues of substrates and inhibitors derived from pepstatin have been used to clarify the catalytic mechanism of aspartic proteinases. This Perspective summarizes these discoveries and examines how the emerging data may suggest revisions in the mechanism of other putative transition-state analogue inhibitors.