RPE65 is a key metalloenzyme responsible for maintaining visual function in vertebrates. Despite extensive research on this membrane-bound retinoid isomerase, fundamental questions regarding its enzymology remain unanswered. Here, we report the crystal structure of RPE65 in a membrane-like environment. These crystals, obtained from enzymatically active, nondelipidated protein, displayed an unusual packing arrangement wherein RPE65 is embedded in a lipid-detergent sheet. Structural differences between delipidated and nondelipidated RPE65 uncovered key residues involved in substrate uptake and processing. Complementary iron K-edge X-ray absorption spectroscopy data established that RPE65 as isolated contained a divalent iron center and demonstrated the presence of a tightly bound ligand consistent with a coordinated carboxylate group. These results support the hypothesis that the Lewis acidity of iron could be used to promote ester dissociation and generation of a carbocation intermediate required for retinoid isomerization.