Chemical modification to improve biopharmaceutical properties, especially oral absorption and bioavailability, is a common strategy employed by pharmaceutical chemists. The approach often employs a simple structural modification and utilizes ubiquitous endogenous esterases as activation enzymes, although such enzymes are often unidentified. This report describes the crystal structure and specificity of a novel activating enzyme for valacyclovir and valganciclovir. Our structural insights show that human valacyclovirase has a unique binding mode and specificity for amino acid esters. Biochemical data demonstrate that the enzyme hydrolyzes esters of ␣-amino acids exclusively and displays a broad specificity spectrum for the aminoacyl moiety similar to tricorn-interacting aminopeptidase F1. Crystal structures of the enzyme, two mechanistic mutants, and a complex with a product analogue, when combined with biochemical analysis, reveal the key determinants for substrate recognition; that is, a flexible and mostly hydrophobic acyl pocket, a localized negative electrostatic potential, a large open leaving group-accommodating groove, and a pivotal acidic residue, Asp-123, after the nucleophile Ser-122. This is the first time that a residue immediately after the nucleophile has been found to have its side chain directed into the substrate binding pocket and play an essential role in substrate discrimination in serine hydrolases. These results as well as a phylogenetic analysis establish that the enzyme functions as a specific ␣-amino acid ester hydrolase. Valacyclovirase is a valuable target for amino acid ester prodrugbased oral drug delivery enhancement strategies.Chemical modification through reversible prodrug, modification of a candidate drug, is a frequently employed strategy to improve biopharmaceutical properties of a candidate drug. Notable successes include oseltamivir, enalapril, and capecitabine (1). Membrane transport and absorption are usually thought to be improved by the increased lipophilicity and result in improved passive membrane transport (2). More recently we have shown that prodrugs may be transported by carrier-mediated transport mechanisms (3). A second essential step in effective prodrug therapy is the activation (hydrolysis) of the prodrug to the active therapeutic agent. Carboxylesterase is a common target for lipophilic approaches to improved membrane permeability (4 -6). However, often the activation enzymes are unidentified. This manuscript reports the results of structural and biochemical studies on a novel prodrug activating enzyme, human valacyclovirase (VACVase) 4 (7). VACVase catalyzes the hydrolytic activation of two clinically important antiviral nucleoside prodrugs, valacyclovir and valganciclovir (Fig. 1a), resulting in L-valine and their corresponding active drugs acyclovir and ganciclovir. Both acyclovir and ganciclovir are polar molecules and are poorly absorbed with low oral bioavailability of 10 -20% (8) and 6 -9% (9), respectively. The valine ester prodrugs valacyclovir and v...