The design of inhibitors with enhanced potency against proteolytic enzymes has many applications for the treatment of human diseases. In addition to the optimization of chemical interactions between the enzyme and inhibitor, the binding affinity can be increased by constraining the inhibitor to the conformation that is recognized by the enzyme, thus lowering the entropic barrier to complex formation. We have structurally characterized the complexes of a macrocyclic pentapeptide inhibitor and its acyclic analogue with penicillopepsin, an aspartic proteinase, to study the effect of conformational constraint on the binding affinity. The phosphonate-based macrocycle PPi4 (Ki = 0.10 nM) is covalently linked at the P2-Asn and P1'-Phe side chains [nomenclature of Schechter and Berger, Biochim. Biophys. Res. Commun. (1967) 27, 157-162] via an amide bond, relative to the acyclic compound PPi3 (Ki = 42 nM). Comparisons of the high-resolution crystal structures of PPi4-penicillopepsin (0.95 A) and PPi3-penicillopepsin (1.45 A) reveal that the conformations of the inhibitors and their interactions with the enzyme are similar. The 420-fold increase in the binding affinity of PPi4 is attributed to a reduction in its conformational flexibility, thus providing the first rigorous measure of the entropic contribution to the binding energy in a protein-ligand complex and stressing the advantages of the design strategy.