γ-Glutamyl transpeptidase (GGT) is a two-substrate enzyme that plays a central role in glutathione metabolism and is a potential target for drug design. GGT catalyzes the cleavage of γ-glutamyl donor substrates and the transfer of the γ-glutamyl moiety to an amine of an acceptor substrate or water. Although structures of bacterial GGT have revealed details of the protein-ligand interactions at the donor site, the acceptor substrate site is relatively undefined. The recent identification of a species-specific acceptor site inhibitor, OU749, suggests that these inhibitors may be less toxic than glutamine analogues. Here we investigated the donor and acceptor substrate preferences of Bacillus anthracis GGT (CapD) and applied computational approaches in combination with kinetics to probe the structural basis of the enzyme's substrate and inhibitor binding specificities and compare them with human GGT. Site-directed mutagenesis studies showed that the R432A and R520S variants exhibited 6- and 95-fold decreases in hydrolase activity, respectively, and that their activity was not stimulated by the addition of the l-Cys acceptor substrate, suggesting an additional role in acceptor binding and/or catalysis of transpeptidation. Rat GGT (and presumably HuGGT) has strict stereospecificity for L-amino acid acceptor substrates, while CapD can utilize both L- and D-acceptor substrates comparably. Modeling and kinetic analysis suggest that R520 and R432 allow two alternate acceptor substrate binding modes for L- and D-acceptors. R432 is conserved in Francisella tularensis, Yersinia pestis, Burkholderia mallei, Helicobacter pylori and Escherichia coli, but not in human GGT. Docking and MD simulations point toward key residues that contribute to inhibitor and acceptor substrate binding, providing a guide to designing novel and specific GGT inhibitors.