The crystallographic and molecular structure of the class A beta-lactamase (penicillinase) of Bacillus licheniformis 749/C has been refined with X-ray diffraction data to 2 A resolution. For the 27,330 data with F greater than or equal to 3 sigma(F), the R factor is 0.15; for all 30,090 data, R is 0.16. The estimated co-ordinate error is 0.15 A. In the final model, the deviation of covalent bonds and angles from ideality is 0.012 A and 2.2 degrees, respectively. The model includes two molecules of 29,500 daltons each in the asymmetric unit of space group P2(1), 484 water molecules and two tetrahedral buffer anions. Overlay of the two protein molecules results in a root-mean-square difference of 0.17 A and 0.41 A for alpha-carbon atoms and for all atoms, respectively. Twenty-six water molecules fall within 0.25 A of matching water molecules associated with the second protein molecule. The reactive Ser70 is on a turn of 3(10) helix at the N terminus of a longer alpha-helix (72-83). The penicillin-binding site near this helix contains at least seven water molecules. Upon penicillin entry, a water molecule in the oxyanion hole, hydrogen-bonded between the N terminus of helix (80-83) and beta-strand (230-238), would be displaced by the oxygen atom of the beta-lactam carbonyl group. An unexpelled molecule of water is proposed to be the catalytic water required for penicillin hydrolysis. The water is hydrogen-bonded to Glu166, a conserved residue in all beta-lactamases, and it lies 3 A from the alpha-face of a previously modeled penicillin. The position of the water-Glu166 pair is stabilized in the active site by a cis peptide bond at Pro167.