The l-2-haloacid dehalogenase from the 1,2-dichloroethane-degrading bacterium Xanthobacter autotrophicus GJ10 catalyzes the hydrolytic dehalogenation of small l-2-haloalkanoates to their correspondingd-2-hydroxyalkanoates, with inversion of the configuration at the C2 atom. The structure of the apoenzyme at pH 8 was refined at 1.5-Å resolution. By lowering the pH, the catalytic activity of the enzyme was considerably reduced, allowing the crystal structure determination of the complexes withl-2-monochloropropionate and monochloroacetate at 1.7 and 2.1 Å resolution, respectively. Both complexes showed unambiguous electron density extending from the nucleophile Asp8 to the C2 atom of the dechlorinated substrates corresponding to a covalent enzyme-ester reaction intermediate. The halide ion that is cleaved off is found in line with the Asp8Oδ1–C2 bond in a halide-stabilizing cradle made up of Arg39, Asn115, and Phe175. In both complexes, the Asp8 Oδ2 carbonyl oxygen atom interacts with Thr12, Ser171, and Asn173, which possibly constitute the oxyanion hole in the hydrolysis of the ester bond. The carboxyl moiety of the substrate is held in position by interactions with Ser114, Lys147, and main chain NH groups. The l-2-monochloropropionate CH3 group is located in a small pocket formed by side chain atoms of Lys147, Asn173, Phe175, and Asp176. The size and position of the pocket explain the stereospecificity and the limited substrate specificity of the enzyme. These crystallographic results demonstrate that the reaction of the enzyme proceeds via the formation of a covalent enzyme-ester intermediate at the nucleophile Asp8.