Dienelactone hydrolase (DLH), an enzyme from the beta-ketoadipate pathway, catalyses the hydrolysis of dienelactone to maleylacetate. DLH is unusual because it is the only known naturally occurring enzyme which contains the catalytic triad Cys ... His ... Asp. This triad has previously been created artificially in the mutant serine proteases, thiol subtilisin and thiol trypsin. In both cases the mutant enzymes exhibited activities several orders of magnitude lower than the wild type enzymes; the low reactivity has generally been attributed to the inability of these enzymes to form a catalytically active thiolate anion (Cys- ... His+ ... Asp-). The crystal structure of DLH suggests that the native enzyme exists predominantly in a catalytically inert configuration; the triad cysteine is neutral and points away from the active site binding cleft. However, a crystallographic analysis of C123S DLH complexed with an isostructural inhibitor (dienelactam) indicates that substrate binding induces a prototropic rearrangement of the active site prior to catalysis which results in the formation of a highly nucleophilic thiolate anion. We have performed ab initio SCF/MP2 calculations on a relatively small portion of the active site of DLH to examine the details of this activation process. Our calculations provide supporting evidence that the conformational changes observed in the crystal structure due to inhibitor (or substrate) binding facilitate the formation of a reactive thiolate anion. In particular, substrate binding alters the position of Glu36; the carboxylate side chain of Glu36 is pushed towards C123 enabling it to abstract the thiol proton thus creating a catalytically active thiolate anion.(ABSTRACT TRUNCATED AT 250 WORDS)