SUMMARY
Intramembrane proteases signal by releasing proteins from the membrane, but despite their importance their enzymatic mechanisms remain obscure. We probed rhomboid proteases with reversible, mechanism-based inhibitors that allow precise kinetic analysis, and faithfully mimic the transition-state structurally. Contrary to expectation, inhibition by peptide aldehydes is non-competitive, revealing that, in the Michaelis complex, substrate does not contact the catalytic center. Structural analysis in a membrane revealed all extracellular loops of rhomboid make stabilizing interactions with substrate, but mainly through backbone interactions, explaining rhomboid's broad sequence selectivity. At the catalytic site, the tetrahedral intermediate lies covalently attached to the catalytic serine alone, with the oxyanion stabilized by unusual tripartite interactions with the sidechains of H150, N154, and the backbone of S201. We also unexpectedly visualized ‘extra’ substrate-enzyme interactions at the non-essential P2/P3 residues. These interactions foster potent rhomboid inhibition in living cells, thereby opening avenues for rational design of selective rhomboid inhibitors.