The Sir2 family of proteins consists of broadly conserved NAD(+)-dependent deacetylases that are implicated in diverse biological processes, including DNA regulation, metabolism, and longevity. Sir2 proteins are regulated in part by the cellular concentrations of a noncompetitive inhibitor, nicotinamide, that reacts with a Sir2 reaction intermediate via a base-exchange reaction to reform NAD(+) at the expense of deacetylation. To gain a mechanistic understanding of nicotinamide inhibition in Sir2 enzymes, we captured the structure of nicotinamide bound to a Sir2 homolog, yeast Hst2, in complex with its acetyl-lysine 16 histone H4 substrate and a reaction intermediate analog, ADP-HPD. Together with related biochemical studies and structures, we identify a nicotinamide inhibition and base-exchange site that is distinct from the so-called "C pocket" binding site for the nicotinamide group of NAD(+). These results provide insights into the Sir2 mechanism of nicotinamide inhibition and have important implications for the development of Sir2-specific effectors.