Spectrochemical probes have demonstrated that the conformations of carboxypeptidase A differ in solution and in the crystalline state. Detailed kinetic studies of carboxypeptidase A crystals and solutions now show that the physical state of the enzyme is also a critical parameter that affects this enzyme's function. Thus, for all substrates examined, crystallization of the enzyme markedly reduces catalytic efficiency, kcat, from 20- to 1000-fold. In addition, substrate inhibition, apparent in solution for some di- and depsipeptides, is abolished with crystals, while longer substrates with normal kinetics in solution may exhibit activation with the crystals. The physical state of the enzyme also affects the mode of action of known modifiers of peptidase activity of the enzyme. In solution, addition of benzoylglycine or cinnamic acid markedly increases the rate of hydrolysis of CbzGly-Phe, but, with the crystalline enzyme, their addition hardly alters the activity. This is in accord with the weakening or absence of inhibitory enzyme-substrate binding modes. Kinetic studies on crystals were carried out over a range of enzyme concentrations, substrate concentrations, and crystal sizes, and in all instances the results are in good agreement with the theory developed by Katchalski for enzymes insolubilized by other means. Importantly, these kinetic parameters are determined under conditions which obviate artifacts due to diffusion limitation of substrates or products. The differences in the kinetic behavior of carboxypeptidase crystals, on the one hand, and of their solutions, on the other hand, bear importantly on efforts to interpret the function of the enzyme in structural terms. Hypothetical modes of substrate-enzyme interaction, generated by superimposing substrate models on the crystal structure of carboxypeptidase to stimulate kinetics in solution, have failed to detect all of these changes which affect inhibitory or activating binding modes.