Angiotensin I-converting enzymes (ACEs) are zinc metallopeptidases that cleave carboxy-terminal dipeptides from short peptide hormones. We have determined the crystal structures of AnCE, a Drosophila homolog of ACE, with and without bound inhibitors to 2.4 A resolution. AnCE contains a large internal channel encompassing the entire protein molecule. This substrate-binding channel is composed of two chambers, reminiscent of a peanut shell. The inhibitor and zinc-binding sites are located in the narrow bottleneck connecting the two chambers. The substrate and inhibitor specificity of AnCE appears to be determined by extensive hydrogen-bonding networks and ionic interactions in the active site channel. The catalytically important zinc ion is coordinated by the conserved Glu395 and histidine residues from a HExxH motif.