Fumarylacetoacetate hydrolase (FAH) catalyzes the hydrolytic cleavage of a carbon-carbon bond in fumarylacetoacetate to yield fumarate and acetoacetate as the final step of Phe and Tyr degradation. This unusual reaction is an essential human metabolic function, with loss of FAH activity causing the fatal metabolic disease hereditary tyrosinemia type I (HT1). An enzymatic mechanism involving a catalytic metal ion, a Glu/His catalytic dyad, and a charged oxyanion hole was previously proposed based on recently determined FAH crystal structures. Here we report the development and characterization of an FAH inhibitor, 4-(hydroxymethylphosphinoyl)-3-oxo-butanoic acid (HMPOBA), that competes with the physiological substrate with a K(i) of 85 microM. The crystal structure of FAH complexed with HMPOBA refined at 1.3-A resolution reveals the molecular basis for the competitive inhibition, supports the proposed formation of a tetrahedral alkoxy transition state intermediate during the FAH catalyzed reaction, and reveals a Mg(2+) bound in the enzyme's active site. The analysis of FAH structures corresponding to different catalytic states reveals significant active site side-chain motions that may also be related to catalytic function. Thus, these results advance the understanding of an essential catabolic reaction associated with a fatal metabolic disease and provide insight into the structure-based development of FAH inhibitors.