The inositol monophosphatase (IMPase) enzyme from the hyperthermophilic archaeon Methanocaldococcus jannaschii requires Mg(2+) for activity and binds three to four ions tightly in the absence of ligands: K(D) = 0.8 muM for one ion with a K(D) of 38 muM for the other Mg(2+) ions. However, the enzyme requires 5-10 mM Mg(2+) for optimum catalysis, suggesting substrate alters the metal ion affinity. In crystal structures of this archaeal IMPase with products, one of the three metal ions is coordinated by only one protein contact, Asp38. The importance of this and three other acidic residues in a mobile loop that approaches the active site was probed with mutational studies. Only D38A exhibited an increased kinetic K(D) for Mg(2+); D26A, E39A, and E41A showed no significant change in the Mg(2+) requirement for optimal activity. D38A also showed an increased K(m), but little effect on k(cat). This behavior is consistent with this side chain coordinating the third metal ion in the substrate complex, but with sufficient flexibility in the loop such that other acidic residues could position the Mg(2+) in the active site in the absence of Asp38. While lithium ion inhibition of the archaeal IMPase is very poor (IC(50) approximately 250 mM), the D38A enzyme has a dramatically enhanced sensitivity to Li(+) with an IC(50) of 12 mM. These results constitute additional evidence for three metal ion assisted catalysis with substrate and product binding reducing affinity of the third necessary metal ion. They also suggest a specific mode of action for lithium inhibition in the IMPase superfamily.