Bile acids deactivate certain enzymes, such as prolyl endopeptidases (PEPs), which are investigated as candidates for protease-based therapy for celiac sprue. Deactivation by bile acids presents a problem for therapeutic enzymes targetted to function in the upper intestine. However, enzyme deactivation by bile acids is not a general phenomenon. Trypsin and chymotrypsin are not deactivated by bile acids. In fact, these pancreatic enzymes are more efficient at cleaving large dietary substrates in the presence of bile acids. We targeted the origin of the apparently different effect of bile acids on prolyl endopeptidases and pancreatic enzymes by examining the effect of bile acids on the kinetics of cleavage of small substrates, and by determining the effect of bile acids on the thermodynamic stabilities of these enzymes. Physiological amounts (5 mM) of cholic acid decrease the thermodynamic stability of Flavobacterium meningosepticum PEP from 18.5 ± 2 kcal/mol to 10.5 ± 1 kcal/mol, while thermostability of trypsin and chymotrypsin is unchanged. Trypsin and chymotrypsin activation by bile and PEP deactivation can both be explained in terms of a common mechanism: bile acid-mediated protein destabilization. Bile acids, usually considered non-denaturing surfactants, in this case act as a destabilizing agent on PEP thus deactivating the enzyme. However, this level of global thermodynamic destabilization does not account for a more than 50% decrease in enzyme activity, suggesting that bile acids most likely modulate enzyme activity through specific local interactions.