The phosphatase KdsC cleaves 3-deoxy-D-manno-octulosonate 8-phosphate to generate a molecule of inorganic phosphate and Kdo. Kdo is an essential component of the lipopolysaccharide envelope in Gram-negative bacteria. Because lipopolysaccharide is an important determinant of bacterial resistance and toxicity, KdsC is a potential target for novel antibacterial agents. KdsC belongs to the broad haloacid dehalogenase superfamily. In haloacid dehalogenase superfamily enzymes, substrate specificity and catalytic efficiency are generally dictated by a fold feature called the cap domain. It is therefore not clear why KdsC, which lacks a cap domain, is catalytically efficient and highly specific to 3-deoxy-D-manno-octulosonate 8-phosphate. Here, we present a set of seven structures of tetrameric Escherichia coli KdsC (ranging from 1.4 to 3.06 A in resolution) that model different intermediate states in its catalytic mechanism. A crystal structure of product-bound E. coli KdsC shows how the interface between adjacent monomers defines the active site pocket. Kdo is engaged in a network of polar and nonpolar interactions with residues at this interface, which explains substrate specificity. Furthermore, this structural and kinetic analysis strongly suggests that the binding of the flexible C-terminal region (tail) to the active site makes KdsC catalytically efficient by facilitating product release.