A peptide segment that binds the active site of a serine protease in a substrate-like manner may behave like an inhibitor or a substrate. However, there is sparse information on which factors determine the behavior a particular peptide segment will exhibit. Here, we describe the first x-ray crystal structure of a nanobody in complex with a serine protease. The nanobody displays a new type of interaction between an antibody and a serine protease as it inserts its complementary determining region-H3 loop into the active site of the protease in a substrate-like manner. The unique binding mechanism causes the nanobody to behave as a strong inhibitor as well as a poor substrate. Intriguingly, its substrate behavior is incomplete, as 30 -40% of the nanobody remained intact and inhibitory after prolonged incubation with the protease. Biochemical analysis reveals that an intra-loop interaction network within the complementary determining region-H3 of the nanobody balances its inhibitor versus substrate behavior. Collectively, our results unveil molecular factors, which may be a general mechanism to determine the substrate versus inhibitor behavior of other protease inhibitors.Serine proteases catalyze the hydrolysis of peptide bonds and are involved in numerous physiological processes, including digestion, blood clotting, fibrinolysis, complement activation, and turnover of the extracellular matrix (1). Neutralizing serine protease activity using orthosteric inhibitors, i.e. active site binding inhibitors, has been shown to be a successful therapeutic strategy for a number of pathological conditions, although the similar active site topology in all serine proteases increases the risk of off-target effects. Today, serine protease inhibitors are clinically used for therapy of several diseases, including thrombosis and bleeding disorders (2-4).All serine proteases catalyze the same type of hydrolytic reaction utilizing the same biochemical mechanism. Serine protease-catalyzed hydrolysis of a scissile bond proceeds through a highly conserved mechanism involving two tetrahedral intermediates and an acyl-enzyme complex. The polypeptide substrate is aligned in the active site of the protease interacting with the substrate specificity pockets denoted S1-Sn and S1Ј-SnЈ on the acyl and leaving group side of the scissile bond, respectively (5). The P1 residue of the substrate binds into the S1 pocket, and its carbonyl oxygen atom is inserted into the so-called oxyanion hole (backbone amides of chymotrypsinogen numbering). The catalytic triad (His-57, in the protease generates the required nucleophile for the attack of the hydroxyl group of Ser-195 on the carbonyl group of the P1-P1Ј scissile bond to form the first tetrahedral intermediate and later the acyl-enzyme. Following release of the P1Ј-leaving group, a water molecule performs a second nucleophilic attack, thereby completing the cycle (6).Peptide segments that bind the active site of serine proteases in a substrate-like manner may behave like an inhibitor or substrate. Ho...