The esterolytic enzyme phospholipase A2 specificially splits the 2-acyl linkage of phosphoglycerides in a calcium-dependent reaction. In the pancreas the enzyme occurs as a zymogen which is activated on secretion into the duodenal tract by the removal of seven amino acid residues from the N terminus by trypsin. Having refined our X-ray analysis of the crystal structure of bovine pancreatic phospholipase A2 from 2.4 A (ref. 4) to 1.7 A resolution, we now describe how the structure of the molecule may account for the specificity of the enzyme and for the sudden and dramatic change in activity when the substrate concentration passes the critical micelle concentration.