Inositol monophosphatase plays a pivotal role in the biosynthesis of secondary messengers and is believed to be a target for lithium therapy. It is established how a lithium ion works in inhibiting the enzyme but details of the mechanism for the direct magnesium ion activated hydrolysis of the substrate have been elusive. It is known that substrates require a minimal 1,2-diol phosphate structural motif, which in D-myo-inositol 1-phosphate relates to the fragment comprising the 1-phosphate ester and the 6-hydroxy group. Here it is shown that inhibitors that are D-myo-inositol 1-phosphate substrate analogues possessing 6-substituents larger than the 6-hydroxy group of the substrate, for example, the 6-O-methyl analogue, are able to bind to the enzyme in a congruous manner to the substrate. It is demonstrated, however, that such compounds show no substrate activity whatsoever. It is also shown that a 6-amino group is able to fulfil the role of the 6-hydroxy group of the substrate in conferring substrate activity and that a 6-methylamino group is similarly able to support catalysis. The results indicate that a 6-substituent capable of serving as a hydrogen-bond donor is required in the catalytic mechanism for hydrolysis. It has recently been shown that inositol is displaced from phosphorus with inversion of stereochemistry and we expect that the nucleophilic species is associated with Mg(2+)-1. It is proposed here that the role of the 6-hydroxy group of the substrate is to H-bond with a water molecule or hydroxide ion located on Mg(2+)-2. From this analysis, it appears that the water molecule bound to Mg(2+)-2 serves as a proton donor for the inositolate leaving group in a process that stabilises the alkoxide product and retards the back-reaction.