The nature of the interaction of the transition-state analogue inhibitor l-leucinephosphonic acid (LPA) with the leucine aminopeptidase from Aeromonas proteolytica (AAP) was investigated. LPA was shown to be a competitive inhibitor at pH 8.0 with a Ki of 6.6 μM. Electronic absorption spectra, recorded at pH 7.5 of [CoCo(AAP)], [CoZn(AAP)], and [ZnCo(AAP)] upon addition of LPA suggest that LPA interacts with both metal ions in the dinuclear active site. EPR studies on the Co(II)-substituted forms of AAP revealed that the environments of the Co(II) ions in both [CoZn(AAP)] and [ZnCo(AAP)] become highly asymmetric and constrained upon the addition of LPA and clearly indicate that LPA interacts with both metal ions. The X-ray crystal structure of AAP complexed with LPA was determined at 2.1 Å resolution. The X-ray crystallographic data indicate that LPA interacts with both metal centers in the dinuclear active site of AAP and a single oxygen atom bridge is absent. Thus, LPA binds to the dinuclear active site of AAP as an η-1,2-μ-phosphonate with one ligand to the second metal ion provided by the N-terminal amine. A structural comparison of the binding of phosphonate-containing transition-state analogues to the mono- and bimetallic peptidases provides insight into the requirement for the second metal ion in bridged bimetallic peptidases. On the basis of the results obtained from the spectroscopic and X-ray crystallographic data presented herein along with previously reported mechanistic data for AAP, a new catalytic mechanism for the hydrolysis reaction catalyzed by AAP is proposed.