Tetrahydrolipstatin is a specific lipase inhibitor derived from lipstatin, a lipid produced by Streptomyces toxytricini. In addition to pancreatic lipase, it is shown in the present study that tetrahydrolipstatin also inhibits human gastric lipase, carboxyl ester lipase (cholesterol esterase) of pancreatic origin and the closely related bile-salt-stimulated lipase of human milk. It does not inhibit the exocellular lipase from Rhizopus arrhizus or a lipase recently isolated from Staphylococcus aureus. In the presence of a water-insoluble substrate, such as tributyrin, the inhibition has the characteristics of an irreversible inactivation of the uncompetitive type, thus indicating that an enzyme.substrate.inhibitor complex is formed, which cannot undergo further reaction to yield the normal product. This reaction probably takes place at the aqueous/oil interface of the substrate. In aqueous solution, in the absence of substrate, the inhibition of carboxyl ester lipase by tetrahydrolipstatin has the characteristics of being reversible, and finally becomes of a temporary nature analogues to the trypsin-trypsin inhibitor system. It is suggested that an enzyme-inhibitor complex of an acyl-enzyme type is formed that is slowly hydrolysed, with water as the final acceptor, leaving an intact enzyme and an inactive form of the inhibitor. The enzyme thus consumes the inhibitor, which undergoes a chemical conversion, as indicated by a change in mobility in an appropriate thin-layer chromatographic system, indicating an increase in hydrophilicity. Evidence is presented that the reaction product is an acid and that the functional group of tetrahydrolipstatin is the beta-lactone reacting with the active site of the enzyme.