The serine protease inhibitors of the serpin family are an unusual group of proteins thought to have metastable native structures. Functionally, they are unique among polypeptide protease inhibitors, although their precise mechanism of action remains controversial. Conflicting results from previous studies have suggested that the stable serpin-protease complex is trapped in either a tight Michaelis-like structure, a tetrahedral intermediate, or an acyl-enzyme. In this report we show that, upon association with a target protease, the serpin reactive-center loop (RCL) is cleaved resulting in formation of an acyl-enzyme intermediate. This cleavage is coupled to rapid movement of the RCL into the body of the protein bringing the inhibitor closer to its lowest free energy state. From these data we suggest a model for serpin action in which the drive toward the lowest free energy state results in trapping of the protease-inhibitor complex as an acyl-enzyme intermediate.